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HEARING 

SENATE RULES COMMITTEE 

STATE OF CALIFORNIA 




STATE CAPITOL 

ROOM 113 

SACRAMENTO, CALIFORNIA 

MONDAY, MARCH 11, 1996 
3:03 PM 



MAR 2 6 1996 

SAM FR£ J 

PUBLIC UbrmriY 



296-R 



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SENATE RULES COMMITTEE 
STATE OF CALIFORNIA 



HEARING 



STATE CAPITOL 

ROOM 113 

SACRAMENTO, CALIFORNIA 



MONDAY, MARCH 11, 1996 
3:03 P.M. 



Reported by 



Evelyn J. Mizak 
Shorthand Reporter 



3 1223 03273 6630 



11 



APPEARANCES 
MEMBERS PRESENT 
SENATOR WILLIAM LOCKYER, Chair 
SENATOR ROBERT BEVERLY, Vice Chair 
SENATOR RUBEN AYALA 
SENATOR JOHN LEWIS 



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7 

SENATOR NICHOLAS PETRI S 

8 STAFF PRESEN T 

9 GREG SCHMIDT, Executive Officer 

10 PAT WEBB, Committee Secretary 

11 RICK ROLLENS, Consultant on Bill Referrals 

12 NANCY MICHEL, Consultant on Governor's Appointments 

13 ALSO PRESENT 

14 HENRY M. DUQUE, Member 
Public Utilities Commission 

15 

16 

17 

KENNETH J. O'BRIEN, Inspector General 
18 Youth and Adult Correctional Agency 

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SENATOR QUENTIN KOPP 
SENATOR BILL LEONARD 



4 49383 SFPL: ECONO JRS 
75 SFPL 06/06/03 5 



Ill 

INDEX 

Page 
Proceedings 1 

Governor's Appointees; 

HENRY M. DUQUE, Member 

California Public Utilities Commission 1 

Background and Experience 1 

Statements in Support by SENATOR QUENTIN KOPP 5 

Questions by CHAIRMAN LOCKYER re: 

Electric Restructuring 

and 3-2 Vote by Commission 6 

Questions by SENATOR BILL LEONARD re: 

Role of Legislature in Implementing 

Energy Restructuring 8 

Questions by CHAIRMAN LOCKYER re: 

Need for Statutory or Fiscal 

Policies 9 

Progress of Other States in the 

Area of Restructuring 9 

Questions by SENATOR AYALA re: 

PUC's Recommendation on Industry 

Restructuring regarding Retraining and 

Early Retirement for Unemployed Workers 10 

Encouragement of Severance Pay to 

Encourage Workers to Retire Early 10 

Questions by CHAIRMAN LOCKYER re: 

Judicial Review of PUC Decisions 11 

Commission Chair's Resistance to 

Expansion of Judicial Review 12 

View of Future California if Energy 
Restructuring is Successful 14 

Suggestions on Reforms or Changes in 

Institution Environment of PUC 14 



IV 



Questions by SENATOR AYALA re: 

Position on SCA 21 16 

; Possibility of Election of Commissioners 

and Appointment of Chair by Governor 17 

Inability of Constituents to Get 
s Help with Problems regarding PUC 18 

t, Questions by SENATOR LEONARD re: 

Recommendation of Division of 
Ratepayer Advocates for Rate Increase 
8 in City of Palm Springs 19 

g Ability to Meet with Individual 

Groups or Ratepayers 20 

Public Meetings on Palm Springs Matter 20 

Inability for Commissioners to Talk to 

Each Other Except in Public Meetings 20 

13 Questions by CHAIRMAN LOCKYER re: 

14 Commissioners Constrained from Talking 

to Each Other Except in Public Hearings 21 

Logging of All Contacts from Outside 

16 Parties 22 

17 Possible Exceptions to Logging 22 

18 Views on Division of Ratepayer Advocates 22 

19 Questions by SENATOR PETRIS re: 

20 Consumer Groups that Monitor PUC Meetings 23 

21 Ability of Consumer Groups to Meet with 

Commissioners Individually 24 

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Questions by CHAIRMAN LOCKYER re: 

Explanation of Stranded Costs 24 

Competitive Transition Charge 26 

Motion to Confirm 26 

Committee Action 27 

KENNETH J. O'BRIEN, Inspector General 

Youth and Adult Correctional Agency 27 

Background and Experience 27 



Questions by CHAIRMAN LOCKYER re: 

Significant Accomplishments during 

Previous Year 28 

Controversies 29 

Complaints of Wasted Money 30 

Hostile Reactions from Those 

Investigated 30 

Sexual Harassment Investigation 3 

Questions by SENATOR AYALA re: 

Current Investigations or Audits 33 

EEOC Investigations . 34 

Motion to Confirm 34 

Committee Action 35 

Termination of Proceedings 35 

Certificate of Reporter 36 



1 P-R-O-C-E-E-D-I-N-G-S ' 

2 — 00O00 — 

3 CHAIRMAN LOCKYER: Mr. Duque is our first appointee to 

4 chat with. Come on up to the table, if you will, sir. 

5 MR. DUQUE: Yes, sir. 

6 CHAIRMAN LOCKYER: Good afternoon. 

7 MR. DUQUE: Good afternoon. 

8 CHAIRMAN LOCKYER: Nice to see you again. 

9 MR. DUQUE: Good to see you. 

10 CHAIRMAN LOCKYER: You want to start with a little 

11 I statement? 

12 MR. DUQUE: I was waiting for Senator Kopp. 

13 CHAIRMAN LOCKYER: We've called. 

14 MR. DUQUE: What is your advice? 

15 CHAIRMAN LOCKYER: Go ahead. 

16 MR. DUQUE: Fine. 

17 I appreciate the opportunity to speak to you all today. 

18 My past year as a Commissioner, I've come to 

19 I appreciate the challenges of this position. This past year's 

20 | also convinced me that I can make a difference to the CPUC. The 

21 i Commission has to oversee effective regulation in several 

22 ! dynamic industries. This seems like a tall order. Then I 

23 compare it with what you all are doing, which is something that 

24 affects all Californians, and in some ways it appears to be 

25 humbling. 

2 6 I don't know that there's any one, quote, best 

27 background for a Commissioner. My background, as you know, is 

28 basically a manager of a savings and loan over the past thirty 



1 years. 

2 This -- a job like that requires constant assessment 

3 of risks and investment, dealing primarily with finance. The 

4 work takes careful judgment on a case-by-case bases. That 
experience has taught me caution in the face of uncertainty. 

6 I began in the savings and loan industry in the early 

'60s. The industry at that point helped Californians save and 
finance homes. These were during years of rapid growth. This 

9 was an industry that was closely regulated by the federal 

10 government and by the state. The markets were calm, with the 

11 fed targeting interest rates. 

12 Then came the '70s and '80s, with regulation and 

13 unstable financial markets. Lending long and borrowing short 

14 led to many sleepless nights on my part. That experience taught 

15 me patience in the face of turmoil. 

16 This business experience, I feel, is very useful. The 

17 Commission presents new challenges to that experience. These 

18 challenges include making the regulatory process more responsive 

19 to dynamic markets, to consumer needs, and to you in the 

20 Legislature as the representative of the general interests in 

21 California. 

22 I am and always have been a hands-on manager. I've 

23 attended hearings on the cases assigned to me to get a more 

2 4 comprehensive view of the process that we have. When problems 

25 appear, I try to work quickly with the assigned judge to develop 

2 6 what I hope are effective and fair solutions. When opportunity 

27 to settlement arise amongst diverse interests, I work with the 

28 judge. 



1 Currently, I oversee 108 cases. This is a list that's 

2 going to get larger. My guess is it'll probably get up to 300 

3 cases. But currently, I have 52 in telecommunications, 20 in 

4 energy, 16 in transportation, and 20 in water. 

5 My — I'm told that I'm the first commissioner since 

6 Bill Bagley to really have an interest in water on the 

7 Commission. Those of you who are my age will remember the Great 

8 Gildersleeve, and I am referred to many times as the Water 

9 Commissioner. 

10 This challenge goes beyond my own case management. The 

11 Commission needs to manage its workload more effectively and 

12 promptly, which is going to require a more proactive managers r t 

13 to anticipate the problems and encourage settlements in dynam. . 

14 markets. 

15 With such dynamic markets, I would support a change in 

16 judicial review if it will not prolong the determination of the 

17 cases. Many of our cases, I believe, take far too long. 

18 I do support close coordination of the Energy 

19 Commission to use the staff resources that they have available. 

20 I do support the Vision 2000, which you've all been exposed to. 

21 I believe that the Vision 2000 is just the beginning. It's a 

22 living document. It's something that is going to continue to 

23 grow. It's going to be fine-tuned. 

24 As a matter of fact, one of the products of Vision 

25 2000, doing things on a basis — an internal basis of reform, I 

26 was the lead Commissioner on selecting our new Executive 

27 Director, Wes Franklin, who is here in the audience today. 

28 I want to turn to Commission policy and my views on the 



1 role of regulation. We must start by supporting the existing 

2 physical and human infrastructure. I want to encourage 

3 competition. Effective competition can serve the customer, 

4 and when I say customer, I use customer and ratepayer 

5 interchangeably, but in this new world, these are our 

6 customers. 

But competition isn't just a word. To move from 

8 regulation to competition requires care to protect the consumer 

9 j and to develop the markets. I see an enduring role for the 

10 Commission in ensuring open entry in the market in protecting 

11 ! consumers. 

12 In telecommunications during the past five years, we've 

13 moved far down the path of deregulation, introducing incentive 

14 regulation and allowing entry in most markets. However, we are 

15 still finding our way on this path. Just recently, I sponsored 

16 an alternate decision which revises the incentive rule for local 

17 exchange companies in order to balance the interests of the 

18 consumer, the employees, and the shareholders. 

19 In electricity, as you all know, we just issued our 

20 policy decision. This relies heavily on the Memorandum of 

21 Understanding. It's utility, consumer, and independent power 

22 interests negotiated last year. Our road map decision encourages 

23 all interested parties to participate in working groups to help 

24 us develop guidelines for implementing policy. 

25 But open entry and competition does not solve all 

26 problems. Recently, we have received complaints about slamming. 

27 This occurs when a long-distance phone carrier switches a 

28 customer without the customer's consent. 



1 I believe that we are now developing an effective 

2 strategy which attacks this problem. This is a problem that I 

3 know you're aware affects all consumers in this state. 

4 I've tried to review my experience and my views on 

5 regulation. I ask for your confirmation, and I'm ready to 

6 respond to any questions which you may have. 

7 Thank you. 

8 CHAIRMAN LOCKYER: Senator Kopp. 

9 SENATOR KOPP: Thank you very much, Mr. Chairman. My 

10 apologies to the Committee and to Mr. Duque for not being here 

11 to present him. But from the presentation portion I heard, I 

12 think that would be carrying coals to New Castle. 

13 I do, however, want to express myself in strong and 

14 unremitting support of the confirmation of Mr. Duque. I do so 

15 because of two primary reasons. 

16 I think in evaluating a nominee for the Public 

17 Utilities Commission, it is wise to reflect on the history and 

18 the reason for the creation of the Commission. And there are 

19 two, I think, quintessential qualities that are a part of 

20 necessary qualifications. 

21 First is the intellectual integrity and the 

22 intellectual honesty to serve the public as a member of the 

23 Commission in the ways which reflect the reason for the creation 

24 of the Commission. 

25 I like the reference made to the use of the word 

26 consumer and ratepayer, because that's a strong part of the 

27 reason for which the Commission was created. 
- The second quality is the intellectual capacity, the 



1 mental capacity/ and the desire and energy to assume 

2 responsibility for the numerous kinds of actions which are a 

3 part of the Commission's Constitutional and statutory 

4 provisions. And I wouldn't at all minimize that quality as a 

5 necessary quality in any nominee who was worthy of 

6 confirmation. 

Mr. Duque has imparted to you his wide and his strong 

8 background in business, but I think equally as significant are 

9 the number of different responsibilities which he has as assumed 

10 in the past several months of his membership on the Commission. 

11 I know personally of his devotion to those responsibilities. 

12 I know of no incident or incidence in which he has 

13 failed in those responsibilities, and the fact of his several 

14 months of service is a barometer of his ability to continue to 

15 serve during the term of his appointment to the Commission. 

16 Mr. Chairman and Members, I sincerely and genuinely — 

17 and I'm glad Senator Petris is here at least to hear my final 

18 comments — I sincerely urge that the Committee recommend his 

19 confirmation to the full State Senate. 

20 Thank you. 

21 CHAIRMAN LOCKYER: Thank you, Senator. 

22 Let's talk for a few minutes about electric 

23 restructuring. Can you try, maybe, to explain to us, as people 

24 who are essentially lay Members of the Legislature who don't 

25 spend every minute involved in the details of a program or 

26 policy that is as complex and controversial as that, what did 
2 7 the three-two vote mean? 

28 MR. DUQUE: The three-two vote, Senator, was — there 



1 is a very small philosophical difference. I liken it to — 

2 well, two months before the decision, I looked at a set of 

3 bookends. And as we were getting close to December 20, the 

4 bookends were getting much closer. 

5 It's a philosophical difference, and it's basically 

6 over direct access. The majority opinion felt that immediate 

7 direct access would cause chaos and confusion when it came to 

8 the consumers. And as you know on the Commission, in theory it 

9 may take, you know, five years before everything gets done. 

10 That's the outside, but our feeling is that it could be done 

11 sooner. A lot depends on what input we get from the utilities, 

12 from the interested parties. 

13 But it was basically a philosophical difference on 

14 direct access and the timing of direct access. My guess is, if 

15 we could hold the vote a year from now, you'll probably see 

16 unanimity. It was very close to a 5-0 vote. 

17 CHAIRMAN LOCKYER: The majority view was it would just 

18 be, what, it would be too disruptive of the market, and the 

19 market stability to move that quickly? 

20 MR. DUQUE: Yes, sir. Disruptive of the market, but 

21 also disruptive from the consumer's standpoint. And not so much 

22 the large users, but it's what I would term the Mom and Pop, the 

23 cleaners, and also the individual ratepayer, the individual 

24 customer. 

25 One of the things that has happened in telephone 

26 deregulation is that I'm not so sure that every customer knows 

27 who's their long-distance carrier. I think that's a confusion 

28 that we don't want, or we hope to avoid in electric 



8 

1 restructuring. 

2 CHAIRMAN LOCKYER: I'm sure, in fact, that there's so 
many, since Ma Bell got schizophrenic, there's so many pieces of 

4 the industry that it's kind of hard to follow who does what. 

5 MR. DUQUE: Yes, it is. And it's difficult for us to 

6 follow, but I think we're on top of it. 

7 CHAIRMAN LOCKYER: Well, I want to defer to other 

8 Senators. 

9 Senator Leonard, thank you for joining us. We know you 

10 and Senator Peace play a major role in the reformed discussions 

11 that are currently under way again, so we invite you to 

12 participate whenever you're so moved. 

13 SENATOR LEONARD: Mr. Chairman, a follow-up to your 

14 question would be what Commissioner Duque thinks the role of the 

15 Legislature is in implementing energy restructuring? I think 

16 the Committee might have an interest in your views. 

17 MR. DUQUE: I believe, as I believe you know, Senator, 

18 and I know Senator Peace knows it, my feeling is that the 

19 Legislature and the Commission have got to work together. 

20 Neither of us have all of the answers. And I, for one, and I 

21 really believe that all the Commissioners are intent on working 

22 closely with the Legislature. 

23 To me, it's imperative, because I don't have infinite 

24 wisdom, and I don't know anybody that does. To me, it's a team 

25 effort. It's like anything that I've done in business time 

26 after time, if everybody works on something, you're going to 

27 have a solution one way or another. 

28 That's why I was really pleased to see the MOU, because 



1 I think without the MOU, Lord knows what sort of a decision we 

2 might have had. I mean, we might still be debating it 

3 internally with no decision at this point. 

4 SENATOR LEONARD: Just a follow-up. 

5 So, energy restructuring will not go forward without 

6 some affirmative concurrence of the Legislature? 

7 MR. DUQUE: We will work with the Legislature, yes, 

8 sir. We want to work with the Legislature. 

9 CHAIRMAN LOCKYER: Is there a need for any statutory or 

10 fiscal policies, or work to be done here? 

11 MR. DUQUE: Senator, I think there will be down the 

12 line within the not-too-distant future. 

13 A lot is going to depend — we are still out for 

14 comment from the industry, from everyone. And once all those 

15 comments get in, we can then weigh them. 

16 But I, for one, and I believe I can speak for the rest 

17 of my colleagues, that we want to work with the Legislature. 

18 Even if we didn't, we've got to do it. Otherwise, 

19 nothing's going to get done, and the poor ratepayer, poor 

20 customer, there's going to be — something's going to happen to 

21 him that none us would like. 

22 CHAIRMAN LOCKYER: Is this happening in other states? 

23 Are we ahead? 

24 MR. DUQUE: It's hard to say. Massachusetts is doing 

25 something, so is Pennsylvania. I believe Massachusetts has 

26 something like a two-year timeframe, and some people have 

27 said — I just came back from a meeting in Washington — people 

28 have said, well, Massachusetts can do it faster than you can. I 



10 

1 said, well, maybe they can. I don't know. I mean, no one's done 

2 it before. 

3 My personal feeling is, if we can do it in two years, 

4 that's fine. But if it takes five years, let's take five years 

5 and do it right. 

6 And Pennsylvania's doing something, but I don't know 
what they're doing with the CTC. It may be that — well, I 

8 honestly don't know. There is a bill before the Pennsylvania 

9 Legislature which I was made aware of, but I haven't had a 

10 chance to look at it. 

11 CHAIRMAN LOCKYER: Senator Ayala. 

12 SENATOR AYALA: In the PUC's recommendation to the 

13 industry to restructure, you give them two proposals. What 

14 you're saying about the people, they might down-size the 

15 industry, which means a lot of people go out of work. The PUC's 

16 recommending retraining and early retirement. 

17 Did you ever consider some way of giving severance pay 

18 to these people to encourage them to retire early? 

19 MR. DUQUE: Yes, I have. And my interpretation of what 

20 we said includes severance pay. Granted, it does not 

21 specifically say that. I mean, it will at some point, but that 

22 is a part of it. 

2 3 SENATOR AYALA: But the PUC is encouraging that for the 

24 industry, encouraging them to do thank? 

25 MR. DUQUE: Yes, the purpose of deregulation in the 
2 6 electric industry is primarily to lower the cost of 

27 electricity. The purpose is not to throw people out on the 

28 street without jobs. That's not our motivation. 



11 

1 SENATOR AYALA: In the proposal, that is included, but 

2 it didn't show? I didn't understand how you define that? 

3 MR. DUQUE: Well, I think that will be clarified as we 

4 go down the road. 

5 As I say, my feeling was that it was an inference. 

6 That's what I meant by it. But I don't see any — 

7 SENATOR AYALA: Would it be in the proposal that that 

8 became true? 

9 MR. DUQUE: I hope so, it should be. I have no problem 

10 with it. 

11 SENATOR AYALA: Thank you. 

12 CHAIRMAN LOCKYER: Let's jump, I guess, to judicial 

13 review of PUC decisions. 

14 Current law allows only the Supreme Court to do that. 

15 They seem generally reluctant to do so. Various Senators over 

16 the last several years have carried legislation that would allow 

17 for some partial judicial review. 

18 Have you had a chance to be involved in this debate? 

19 Do you have any settled opinions about it? 

20 MR. DUQUE: Some, yes. 

21 My feeling is that any judicial review — I mean, there 

22 should be judicial I review. I would hope that whatever 

23 judicial review we have, it does not slow down our process. 

24 I know there's some thought that maybe we go to 

25 District Courts of Appeal, and that may be a way. I certainly 

26 would hope that we wouldn't go any lower than the District 

27 Courts of Appeal, because a lot of the material that we handle 

28 is pretty technical. 



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It may be, God only knows, you know, there may be a 
separate court set up; I don't know. 

There's got to be judicial review, and there are some 
short comings with the way it is set up at present. 

CHAIRMAN LOCKYER: Pursuant to your own personal 
opinion, you won't resist expansion of judicial review? 

MR. DUQUE: No. 

CHAIRMAN LOCKYER: That seems to be contrary to the 
Chair's view. Has he argued this point vigorously with you? 

MR. DUQUE: Dan and I argue quite often. 

CHAIRMAN LOCKYER: Maybe we ought to ask the for the 
list of what you've argued over. 

[Laughter] 

MR. DUQUE: Lots of things. He was in my office on 
Friday, talking about some things. And it's just — we don't 
see eye to eye on everything, and we particularly don't on 
this . 

I think his main concern is that the judicial review 
could end up in some lower court, and then we're just mired down 
and get no review. And that's — I don't want that either, 
because I would like an expeditious review. 

CHAIRMAN LOCKYER: I've never heard anyone propose 
lower than Courts of Appeal in any serious way. 

MR. DUQUE: I would hope not. 

CHAIRMAN LOCKYER: And then, one of the debates is, 
would it always have to go to the same one, or could it go to 
different courts, and uniformity of judgement. 

MR. DUQUE: I can't answer that because I'm not an 



13 

1 attorney. I would hope that it would go to one where you would 

2 have uniform hearings. 

3 CHAIRMAN LOCKYER: There are some that worry that that 

4 might be too much of a burden on that one forum. 

5 MR. DUQUE: It might be, I don't know. 

6 CHAIRMAN LOCKYER: And distinguishing between what are 

7 policy judgments that shouldn't be reviewable, that are 

8 '< different from legal-type decisions that are appropriate to have 

9 some judicial review of, I guess those have been the problems 

10 ; we've dealt with. 

11 I'm worried, because I think that the legislative 

12 i discussion this year of PUC reform, that is, the decision-making 

13 process and environment — which is in no way meant to be 

14 I critical of existing Commissioners, just a view that there's a 

15 need for it — in much same way that the Telecommunications Act 

16 at federal level creates an institutional environment or 

17 | regulatory environment that recognizes the market roll, that 

18 hopefully, that that discussion will be successful this year. 

19 I'm counting on Senator Peace and Leonard and others in our 

20 House, but principally those two. 

21 MR. DUQUE: And I would like to work with Senator Peace 

22 and Senator Leonard. 

23 CHAIRMAN LOCKYER: Judicial review seems to be one of 

24 the areas that have caused problems in the past. It's always 

25 interesting. I don't know what causes this, but when a 

26 Legislator, or especially a Governor, has made up their mind 

27 about one little piece of the puzzle, as Governor Wilson, I 

28 think it is fair to say, has very, very strong opinions about 



14 

1 this topic, well, that's been the problem, basically. 

2 But I think it emanates from Professor Fessler being 

3 too persuasive on previous occasions. 

4 MR. DUQUE: That could very well be. It could very 

5 well be. 

6 CHAIRMAN LOCKYER: Do you have any sense, if all your 
efforts are successful at electrical restructuring, what might 

8 i the world look like? What might California look like in terms 

9 of its prices and availability of energy? What would you hope 

10 would happen 10-2 years from now? 

11 MR. DUQUE: There should be appreciably lower rates. 

12 There should be — I think that the consumer will have any 

13 number of avenues available to he or she as to where they can 

14 get -- from whence they can get their electricity. 

15 One thing, our concern is reliability, and so forth and 

16 so on. 

17 I see the Commission's role in electric restructuring 

18 and a lot of things — I mean, granted, there will still be 

19 monopolies left, be it water — I mean, there still are 

20 monopolies around, but so far as electric restructuring is 

21 concerned, I see us more in an oversight role, more — acting 

22 more as a referee. If we see that somebody's trying to throw a 

23 curve ball at your head, we hopefully will get there before the 

24 pitch gets to you. 

25 CHAIRMAN LOCKYER: It's been almost a year now looking 
2 6 at this process and structure from the inside. 

27 Do you have any reflections to share with us on reforms 

2 8 or changes in the institutional environment that we should hear 



15 

1 from you? 

2 MR. DUQUE: Yes, I do, as a matter of fact. 

3 I feel that there should be reform both inside and 

4 outside. Vision 2000 takes it to a point. Vision 2000, 

5 however, deals, I think, primarily with the Commissioners. It 

6 doesn't really deal with the Commission. 

7 I think things have to be to be done at the 

8 Commission. Things have to be streamlined. I am interested ir 

9 process. My feeling is that most everything we do takes way toe 

10 long. 

11 I've had some success, particularly in the water area 

12 where small water companies, C and D water companies, would file 

13 for rate increases and had to fill out a 42-page application. 

14 If you know C and D water companies, they're maybe a husband and 

15 wife and somebody else involved in the water company. And you 

16 give them a 42-page application, they're lost. I mean, they're 

17 not CPAs. 

18 We now — I was able to work with our water branch. We 

19 cut that down to two pages, and it's this sort of thing. 

20 We have got to be — we are a service organization. We 

21 used to be strictly a regulatory operation. And I believe that 

22 the age of regulation, in most areas, is behind us. 

23 And I have trouble on the Commission dealing with 

24 individuals, staff individuals, who feel that we've got to 

25 regulate. In other words, the inference is that the utility is 

26 basically wrong. 

27 I'm not convinced that the utility is basically wrong. 

28 The utility, or a water company, or whatever it happens to be, 



16 

1 they are running a business. And I am not smart enough to 

2 micromanage their business, and I don't want to do it, and I 

3 don't think that others on the Commission should. The 

4 Commission shouldn't be a micromanager, and the Commission has 

5 been micromanaging. 

6 I think that's what happens in regulation. Yes, I have 

7 some opinions on it. 

8 CHAIRMAN LOCKYER: That's good. They sound 

9 constructive, frankly. 

10 Did you want to put any meat on the bones of any of 

11 those specific proposals? 

12 I think we understand your general thrust. 

13 MR. DUQUE: Not specific, but my feeling is that we're 

14 going through a reorganization right now. And the purpose of 

15 the reorganization not to increase staff at the Commission. 

16 And my feeling is, I don't care how many people we 

17 have, but they'd better be damn good people to do the job, serve 

18 the customer. 

19 CHAIRMAN LOCKYER: Did I see Senator Ayala? 
2 SENATOR AYALA: I had a question. 

21 Are you familiar with SCA 21? 

22 MR. DUQUE: Not by number. Tell me a little more. 

23 SENATOR AYALA: That's one that would eliminate the 

24 PUC, and in its place, come up with an Energy, Utilities, and 
2 5 Communication Commission. Four members would be elected — 

2 6 MR. DUQUE: I am familiar with that. 

27 SENATOR AYALA: — and the Chairman would be the 

28 Governor's selection. 



17 

1 Do you have a position on that SCA 21? 

2 MR. DUQUE: Yes, I do, as a matter of fact. 

3 CHAIRMAN LOCKYER: It's okay to say it's a dumb idea if 

4 you want. 

5 MR. DUQUE: It's not a dumb idea. If it were a dumb 

6 idea, I would say so. It may not be the world's best idea, but 

7 it's not a dumb idea. 

8 My feeling is that both commissions were created for 

9 really different purposes. I see down the road, maybe two 

10 years, three years, I see a merging of the two commissions, 

11 because the Energy Commission was designed for an area that I'm 

12 not sure exists anymore. 

13 They're doing some things that do exist, but there is 

14 | some duplication between the two. I think the duplication 

15 should be eliminated. 

16 My guess is that ultimately, we should have one 

17 commission. I don't care what you call it, but one commission. 

18 SENATOR AYALA: What about the election of four 

19 members and the appointment by the Governor of the President or 

20 Chairman of the Commission? Would you support that? 

21 MR. DUQUE: No, sir, I would not, only because knowing 

22 what my work schedule is now, if I have to go out and run for 

23 election in addition, there's just not enough hours. 

24 SENATOR AYALA: Your argument against it would be that 

25 the members would be subject to lobbyists and so forth, but on 

26 the other hand, they'd be more responsive to somebody. 

27 They are now, once they're approved by the Senate, you 

28 can't even touch them with a 10-foot pole. 



18 

1 MR. DUQUE: Maybe that's true, but I don't believe 

2 that. I mean, as I say, maybe it's true, but I don't see that 

3 with the current group of Commissioners. We don't have a 

4 cavalier attitude towards the ratepayer. I mean, it's the 

5 ratepayer, it's the customer that we're there to protect. 

6 So, I for one and the other four Commissioners, I mean, 
we do got involved in our cases. And I think this is vitally 

8 important. That's the only way you find out what's going on. 

9 When you and I were talking this morning, Senator, you 

10 suggested that, you know, maybe the Commissioners don't listen 

11 to municipalities, and so forth and so on. 

12 I will listen — I mean, if Mayor So-and-so wants to 

13 talk to me about a subject or any subject, I will listen to him, 

14 i because I figure he's got something to say. I believe that very 

15 strongly. 

16 SENATOR AYALA: We discussed that this morning, where 

17 we feel some of the constituents don't know where to go when 

18 they have a problem with the PUC. And they call our offices, 

19 and there's not much we can do with helping them, except get 

20 them in touch — . 

21 MR. DUQUE: Anytime — as I've told every Senator that 

22 I've talked to, A, you can call me if you want to, and I will 

23 get -- we have teams that go out and will give briefings. If 

24 somebody has a problem, we will go out and try and solve that 

25 problem. If there's a utility involved, we will bring the 

26 utility along. 

27 SENATOR AYALA: You told me that this morning. 
2 8 MR. DUQUE: Yes, sir. That's sort of standard 



19 

1 operating procedure for us. And it's going to be more and 

2 more. 

3 I mean, there was a time, before I came, but the 

4 Commission never seemed to really get out. I mean, sort of 

5 closeted yourself on the fifth floor of 505 Van Ness. 

6 I know that the current Commissioners do not feel that 

7 way. We believe that we should be out in the community. We're 

8 doing a lot more in the way of workshops and public meetings, 

9 which I find very invigorating because then you find out what 

10 people are thinking, because I can't — there's a little 

11 J isolation sometime on the fifth floor at 505 Van Ness which I 

12 | don't like. 

13 SENATOR LEONARD: Mr. Chairman, can I follow up on 

14 ! Senator Ayala's question. A case in point came to mind that 

15 Senator Ayala reminded me. 

16 I think City of Palm Springs is most exercised about a 

17 i recommendation of the Division of Ratepayer Advocates for a rate 

18 increase, that the utility didn't ask for, that's now supported, 

19 as I understand it, by an administrative law judge 

20 ! recommendation. 

21 Have you had feedback on that case in your open-door 

22 policy? 

23 MR. DUQUE: Yes, quite a bit. I understand today, the 

24 FAX machine and the telephone are just running wild. 

25 The answer is yes. I've heard from a lot of people all 

26 the way along. Hopefully, we'll vote on it on Wednesday. 

27 And as Senator Ayala said this morning, he said, well, 

28 staff has recommended. I said, well, just because the staff 



20 

1 recommends, that doesn't mean the Commissioners vote for it. 

2 SENATOR LEONARD: Do the rules allow you to meet with 

3 individual groups or ratepayers? 

4 MR. DUQUE: Yes, and we do. 

5 SENATOR LEONARD: You've done that in this case? 

6 MR. DUQUE: Yes, sir, I have. I believe all of us 

7 '. have. 

8 Usually, you know what happens. A group will make the 

9 | rounds, but not always, and there's some Commissioners may not 

10 see them. 

11 SENATOR LEONARD: But the Commission has never met in 

12 formal hearing on this matter as yet, so there hasn't been a 

13 group discussion. It's all been private meetings. 

14 MR. DUQUE: No, it has come out in public meetings. 

15 SENATOR LEONARD: Were the Commissioners present? 

16 MR. DUQUE: Yes, I think in February, as I recall. And 

17 the Commissioners are aware of this. We know — Commissioners 

18 aren't being blind-sided. I think we're — I know I, for one, 

19 am fully aware, and I'm assuming that the others are. 

20 Since communications are not the easiest, I can't say 

21 for sure. But through my advisors, it's my understanding that 

22 the other Commissioners are aware of that particular case. 

23 SENATOR LEONARD: One of my frustrations, Mr. Chairman, 

24 is the communications are through their advisors to each other, 

25 Commissioners. I'm not sure what's the fairest set of rules, 

26 but whereas you and I can talk to each other, they either feel 

27 restricted or are restricted in the legal interpretation and 

28 talk through their staff. It's got to be a difficult way to 



21 



1 work. 

2 MR. DUQUE: It's almost impossible. I mean, it really 

3 is. I've never experienced anything like this in business 

4 before. And I do say, I marvel that we are able to get things 

5 done . 

6 It's not in the best manner, as far as I'm concerned. 

7 I mean, I would be able — you know, talk at public meetings, 

8 that's fine. But I would like to be able to do just exactly 

9 what you Senators can do. If I could do that, it'd make life 

10 easier. 

11 But I think that we could resolve things in a much more 

12 timely manner. That's the thing that disturbs me. Things take 

13 so long. 

14 I've probably had half a dozen instances where 

15 something is coming up before a Commission meeting, and some 

16 Commissioner says, well, I haven't had a chance to read it, or I 

17 don't know how you feel about it. 

18 Well, this is — that's also a part of the system 

19 where sometimes things are brought to us at the last minute. I, 

20 for one, have a little internal rule that if we don't get — if 

21 my office doesn't get something 48 hours before it goes on the 

22 agenda, I won't entertain it, because I have to read it. 

23 I'm more, as I say, I am hands-on, and I'm more the 

24 tire kicker, door slammer, that sort of thing. So, I have to 

25 see it to believe it, that's all. 

26 CHAIRMAN LOCKYER: You're constrained from talking to 

27 each other except at the time you have a public hearing? 

28 MR. DUQUE: Right, a noticed public meeting. 



22 

1 CHAIRMAN LOCKYER: Do you log somewhere all contacts 

2 from outside parties? 

3 MR. DUQUE: Yes, yes. It's logged somewhere. I don't 

4 know where, but everything's logged. 

5 CHAIRMAN LOCKYER: You have to put down what they call 

6 | ex parte communications? 

7 MR. DUQUE: Right. 

8 CHAIRMAN LOCKYER: Do you know if there are any 

9 exceptions to that, to what you have to log? Are there 

10 exceptions, or do you have to list everything? 

11 MR. DUQUE: Oh, I think everything has to be listed, at 

12 ! least that's my understanding. I don't think there's any 

13 running around the barn and getting in the back door. 

14 CHAIRMAN LOCKYER: I think there may be exceptions of 

15 people from the Governor's Office. 

16 MR. DUQUE: Well, if there is, it's not known to me. 

17 CHAIRMAN LOCKYER: You're still noting it when they 

18 talk to you about issues? You're recording it? 

19 MR. DUQUE: I get — I guess, I mean, in eleven months, 

20 I've had no guidance from the Governor's Office. 

21 CHAIRMAN LOCKYER: Well, that's probably good. It 

22 might be bad guidance. They counting on you to use your 

23 judgement. 

24 MR. DUQUE: At least it leaves me independent, and 

25 that's what I believe in. I think that's why we're there. 
2 6 CHAIRMAN LOCKYER: I totally agree with that. 

27 The Division of Ratepayer Advocates, you've probably 

28 heard both praise and criticism of their role. What have you 



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concluded in the last year? 

MR. DUQUE: Well, they are necessary because they — I 
mean, they do similar to what TURN does or U CAN does, but it's 
a little more detail. 

I do feel that the — I'm not saying they're always 
right, but I do feel that the consumer gets good representation 
from them. I think there is a place for DRA. 

Now, whether — it's a whole other subject of whether 
DRA stays part of the Commission or becomes part of the Attorney 
General's Office. That I don't know. 

CHAIRMAN LOCKYER: Any thoughts about that 
preliminarily? 

MR. DUQUE: No, not really. I just — I mean, their 
function is necessary. 

I guess my gut reaction is, if they're with another 
department, they then may be too far away, because there is an 
exchange that goes on in the Commission. I mean, I think it's 
very helpful to have somebody there. You can reach out and grab 
them and talk to them. 

Once again, I'd rather talk to somebody personally than 
talk on the telephone. 

CHAIRMAN LOCKYER: Other questions from Members? 

SENATOR PETRIS: I think all of us have heard about 
TURN over the years. Are there other consumer groups that 
monitor your meetings or at least attend them once in a while? 

MR. DUQUE: TURN and U CAN are the two major ones. 
There's another one, the name goes right out of my head, but 
it's A-something. 



24 

1 But yes, they do monitor. They're watch dogs. I think 

2 that's good, because they are -- I think the consumer, the 

3 customer, should get all the representation that they can get. 

4 SENATOR PETRIS: Are they allowed to meet with each 

5 member individually? 

6 MR. DUQUE: Yes, sir. TURN does fairly often. U CAN, 
which is San Diego based, not as often. I think it's due 

8 primarily to the smaller staff, I don't know, but I've had both 

9 of them in my office. 

10 Quite honestly, I welcome both of them, because 

11 i sometimes you get a very fresh view of what's going on out 

12 there. Then you've got to weigh one against the other to make a 

13 decision. 

14 CHAIRMAN LOCKYER: I guess finally I'd appreciate 

15 learning from you your explanation of the nature of the 

16 controversy, what's at stake, and what you think a fair result 

17 might be with respect to stranded costs? 

18 MR. DUQUE: Well, I can tell you right now that if the 

19 stranded costs, if we were to take the stranded costs and make 
the shareholders pay for them, 100 percent, there 'd be bankrupt 

21 utilities in this state. There is no doubt in my mind. So 

22 really -- 

23 CHAIRMAN LOCKYER: I'm not recommending that, but just 

24 paint the picture. 

2 5 MR. DUQUE: I understand that. 

26 But my feeling is that the shareholder should pay the 

27 bulk of it because it was a risk. 

28 However, when all this came to pass — it was before my 



25 

1 time, but as I understand it — I mean, we had the energy 

2 crisis. Nuclear was the thing to do. The companies were told, 

3 okay, put up nuclear, do all of these things. 

4 So, I'm not so sure that you can blame the utilities 

5 for that. I mean, I think maybe perhaps the government, the 

6 regulators, somebody else was at fault, and they said, okay, 

7 this is what you're going to do. 

8 It's hard for me to say, okay, we told you — I don't 

9 mean we, but somebody else told you to do this. Now, that's too 

10 bad, now you pay for it. If you go out of business, that's too 

11 bad. 

12 I'm not — I think there should be — I should think 

13 there should be a sharing, that's all. 

14 But with the stockholder — well, when you buy stock, 

15 you're taking a risk. And I think you should be ready. 

16 CHAIRMAN LOCKYER: I noticed that last week. 

17 MR. DUQUE: What about today? I haven't heard. 

18 [ There's some risk involved. It used to be, of course, 

19 I utility stocks were the guilt edge and great for widows, 

20 orphans, so forth and so. But hopefully, the public has 

21 realized in the last ten years that that's not true. 

22 Although I do — when I hear that a utility may have to 

23 cut their dividend, I think, okay, here we go. Into our 

24 hearing, there's going to be a thousand people trooping in and 

25 blaming us. 

26 CHAIRMAN LOCKYER: That the bills went up? 

27 MR. DUQUE: Yeah, yeah. 

28 CHAIRMAN LOCKYER: Now, I'm noting in our staff notes, 



26 

1 it talks about the competitive transition charge, the CTC, that 

2 I guess is part of the current proposal. 

3 MR. DUQUE: Uh-huh. 

4 CHAIRMAN LOCKYER: It would contemplate 100 percent 

5 recovery from consumers. That sounds different than what you — 

6 MR. DUQUE: I'm not so sure that it will be 100 percent 
when we get through. Somewhere there's a discount in there so 

8 | that the company's not getting away scot free. 

9 CHAIRMAN LOCKYER: Let me inquire if there are other 

10 questions from Members, first of all. 

11 I'll ask if there's anyone present who wants to 

12 testify, for or against. There's a rather lengthy list of 

13 people who support the confirmation. I don't want to insist on 

14 making you start to come forward, all make comments, but if 

15 someone feels like they want to before we probably have a 5-0 

16 vote here, or 4-0 here. John Lewis is AWOL, presenting a bill, 

17 presenting a complicated bill. 

18 Anyhow, anyone that wishes to comment. 

19 Did you want to close in any way? 

20 MR. DUQUE: No, sir. 

21 CHAIRMAN LOCKYER: The Beverly motion. 

22 SENATOR BEVERLY: Move we recommend confirmation. 

23 CHAIRMAN LOCKYER: We have that motion. Call the roll. 

24 SECRETARY WEBB: Senator Ayala. 

25 SENATOR AYALA: Aye. 



2 6 SECRETARY WEBB 

27 SENATOR PETRI S 

28 SECRETARY WEBB 



Senator Lewis. Senator Petris. 

Aye. 

Petris Aye. Senator Beverly. 



27 

1 SENATOR BEVERLY: Aye. 

2 SECRETARY WEBB: Beverly Aye. Senator Lockyer. 

3 CHAIRMAN LOCKYER: Aye. 

4 SECRETARY WEBB: Lockyer Aye. Four to zero. 

5 CHAIRMAN LOCKYER: Sir, your reputation as fair, 

6 open-minded and objective precedes you, and it's clear from your 

7 comments and testimony why you deserve that reputation. 

8 Additionally, your hard work is appreciated. 

9 MR. DUQUE: And I will not change. 

10 Thank you all very much. I appreciate it. 

11 CHAIRMAN LOCKYER: Mr. O'Brien is next. 

12 Thank you, Mr. O'Brien, for joining us. It appears 

13 maybe you have some introductory statement. 

14 MR. O'BRIEN: Yes, sir. 

15 Thank you, Mr. Chairman, Members of the Committee. I 

16 just wanted to comment on my opening statement in terms of my 

17 background. 

18 I'm pleased to have had the privilege of serving over 

19 40 years in the criminal justice system shortly after my 

20 discharge from the Marine Corps, and in 1955, I began with the 

21 San Diego Police Department and retired as a deputy chief in 

22 ! 1986 with 31 years. 

23 Most of my experience during those years were with the 

24 investigative process in all aspects, from a detective up 

25 through the supervisorial, managerial and administrative 

26 positions, inclusive of the Internal Affairs assignments and 

27 Inspection and Control, which is an audit procedure. 

28 In 1968, upon my retirement, I was appointed Director 



28 

1 j of Investigations to the State Bar. In that capacity/ it was 

2 very much very similar to the job I now am working as Inspector 

3 General, in that I had the opportunity to organize an 

4 investigative branch that received/ evaluated/ and investigated 

5 or conducted follow-up investigations of complaints of 

6 | allegations of misconduct of the 114/000 attorneys that we then 

7 ; had in California. 

8 I left the Bar in 1989 and took a position with the 

9 Commission on Peace Officer Standards and Training, POST. I 

10 began serving as a law enforcement consultant in the Center for 

11 Leadership Development, and then later I was promoted to Bureau 

12 Chief and began my tour in Training Program Services, which was 

13 inclusive of monitoring and updating all Academy trainings for 

14 sheriff and police personnel throughout the state, as well as 

15 technology in the sense of satellite training and video type 

16 training. 

17 In 1992/ I was appointed to the Youth Authority as an 

18 Assistant Director in charge of compliance, which was basically 

19 oversight for the Internal Affairs function and also for the 

20 fiscal audit function. And I also served as the Director's law 

21 enforcement liaison for the Department. 

22 In March of 1995, I left CYA to take the present 

23 position in YACA as the Inspector General for the Youth and 

24 Adult Correctional Agency. 

2 5 CHAIRMAN LOCKYER: What would you regard as significant 

2 6 accomplishments during the previous year? Any specific ones 

27 that stand out in your mind? 

28 MR. O'BRIEN: I think that my — my intent, my goal in 



29 

1 terms of taking this job was recognizing that it was a brand new 

2 job, and that it was somewhat controversial in many of the 

3 areas, in that it was an agency-level job that could be seen as 

4 being intrusive in the day-to-day operations. 

5 My big effort in this entire process for the last year 

6 was to establish credibility and a strong foundation within the 

7 Inspector General's Office by virtue of the types of 

8 investigations that we conducted, or the type of investigations 

9 that we referred. Our interactions with the wardens, the 

10 superintendents, the parole administrators, really beginning to 

11 build a strong foundation that will last long after I'm gone and 

12 for the next person who will have this position. 

13 CHAIRMAN LOCKYER: Anything that was controversial 

14 that you did that got people aroused during the foundation 

15 laying here? 

16 MR. O'BRIEN: I don't know that foundation laying — I 

17 think that when I first reported aboard as the Inspector 

18 General, I had an assignment to do a rather extensive audit of 

19 the California Youth Authority in terms of a number of areas 

20 that were impacting both by the Youth Offenders parole Board and 

21 CYA. And in that sense, a number of issues came up that were 

22 controversial to some of the individuals. 

23 But in the final analysis, I'm pleased to say, and 

24 particularly with the support I received from the Director of 

25 CYA, much of the information that we gleaned from that 

26 Audit were received very well, and it led to number of 

27 recommendations from within to correct deficiencies that they 

28 noted. 



30 

1 CHAIRMAN LOCKYER: Maybe this happens to you. I bump 

2 into people all the time that work in some department or unit in 

3 Corrections that want to claim that there's a waste of money in 

4 some particular area. 

5 Do you hear those kinds of things as well? Does that 

6 come to you? 

7 MR. O'BRIEN: They've not been really the substance of 

8 my -- of my jurisdiction regarding the oversight for 

9 investigations. 

10 During the audit, a number of issues came up where I 

11 felt, based on my experience, that, for example, levels of 

12 improvement of reports, investigative reports, that I didn't 

13 feel were of a good enough standard. That was basically a 

14 ; result of a lot of the cutbacks that they had made in the 

15 organization. 

16 However, I found in some instances some very innovative 

17 superintendents who were compensating for that by different 

18 methodologies. 

19 I think money is always a question. I think that 

20 there's been — there was some real strong efforts when I was in 

21 CYA to ferret out those issues where we were wasting money or 

22 misappropriating money, that type of thing. 

23 CHAIRMAN LOCKYER: Do you ever get a reaction from 

24 superintendents or others, much like you see with maybe mostly 

25 TV programs, that Internal Affairs in a police department, where 
2 6 they're treated kind of hostilely? Does that happen with your 

27 arm? 

28 MR. O'BRIEN: Well, I think that I provide a lot of 



31 



1 anxiety when I arrive at a scene. But I think that my job as 

2 Inspector General — and recently, the last three days, I spent 

3 on the road, going to various institutions in terms of 

4 investigations. 

5 A big part of this job is interpersonal 

6 communications. I think that the less threatening, the less 

7 imposing that me or representatives of my office are, the more 

8 effective we are. And I think that I've seen that as a result 

9 of my experience and exposures to the wardens in their meetings. 

10 They've invited me to some of their quarterly meetings, their 

11 monthly meetings. I've had an opportunity to brief them, to 

12 give them some indications of some of the things that I sense or 

13 that I'm finding. I'm finding a lot of agreement with them. 

14 I suspect that as time goes by, again, going back to my 

15 original statement, how well I'm going to be accepted is based 

16 on the credibility of my work product. 

17 CHAIRMAN LOCKYER: I note that there is a staff 

18 discussion of a sexual harassment investigation that you were 

19 responsible for conducting. 

20 MR. O'BRIEN: Yes, sir. 

21 CHAIRMAN LOCKYER: Could you maybe tell us what went on 

22 in that instance? 

23 MR. O'BRIEN: Well, there were two instances involving 

24 the same individual. 

25 Basically, I had received a complaint from another 

26 manager about this individual's conduct, verbal conduct, in that 

27 he was just crass. Upon receiving the information, I tried to 

28 contact — I contacted the females involved. They were very 



32 

1 reluctant to discuss the issue. 

2 However, I brought the individual in. I spoke with 

3 him, counselled him. He admitted his conduct. As a result of 

4 that, I put a counseling notice in file. 

5 Subsequently, about a year later, or a year-and-a-half 

6 later, he was involved again with a report that I received that 
he again had been crass and boorish. Most of it was verbal, 

8 although there was some touching, and that type of situation. 

9 Again, I contacted the females, who indicated that they 

10 had not complained, but that they had merely been overheard 

11 discussing some of his conduct. 

12 It was my feeling, and I know it's the policy of the 

13 Agency and the Department that when it comes to your attention, 

14 you're required to do something about it, and I informed him 

15 that I would do that. 

16 I brought the offender, the manager, into my office. I 

17 was aware of a lot of personal problems that he had, but that 

18 did not mitigate the fact that I felt he had acted 

19 inappropriately. He admitted having conducted himself 

20 inappropriately. As a result of that, and his condition when I 

21 was speaking with him, I made a judgement that he was in need of 

22 some type of assistance more than just discipline. 

23 I arranged to have him placed into the Employee 

24 Assistance Program, which he agreed to, and I arranged the seven 

25 counseling, and he went through that counseling session, and 
2 6 successfully, because I monitored it and kept in contact with 

27 the counselor. 

28 At the end of that, I placed a formal what we call a 






33 

1 work improvement discussion, a formal reprimand in file, and 

2 then I subsequently denied him the five percent merit pay 

3 increase based on that incident. 

4 To date, although I've been gone now from the CYA for 

5 almost a year, to date I've heard nothing to indicate that what 

6 he did was not successful, and we corrected the problem. 

7 Hopefully, that will continue to be the case. 

8 CHAIRMAN LOCKYER: Are there other inquiries from 

9 Members? Senator. 

10 SENATOR AYALA: I'd just like to ask Mr. O'Brien, are 

11 you conducting currently any investigations or audits at this 

12 point? 

13 MR. O'BRIEN: We are beginning an audit. I've been in 

14 conduct with CDC, Personnel and CYA. I'm about to enact an 

15 extensive audit on the training program. Actually, it's more 

16 than just the training of investigations. What I'm interested 

17 in is how we select people to do investigative — to do 

18 investigations, what kind of training that they receive, and the 

19 quality of the training, and the instructors who provide that. 

20 And I'm also concerned about auditing the completed 

21 investigations to see whether or not the training that they're 

22 receiving is actually impacting the kinds of cases that we're 

23 receiving in the various institutions. I've made a list of 

24 about twenty areas that I'm very concerned about in terms of 

25 emphasis, such as the interviewing and interrogation techniques, 

26 the knowledge of the Police Officers Bill of Rights, and the 

27 processing of how they interact with staff members. 

28 I'm interested in crime scene protection and recording, 



34 

1 the knowledge of laws, as well as policies/ procedures. All of 

2 those things are being isolated, and we anticipate that we, if I 

3 get the people on board to assist me, probably within the next 

4 30 days we'll begin that audit. 

5 SENATOR AYALA: Do any of these include sexual 

6 harassment? 

7 MR. O'BRIEN: Part of the audit will be — it will 

8 cover the EEOC investigations. 

9 I understand that, to some degree in Corrections, some 

10 of the investigations in the EEOC area are a little different 

11 than the investigations conducted by Internal Affairs or the 

12 institution. I'm concerned as to whether or not there should be 

13 more emphasis on consistency in both areas. 

14 We will be conducting an audit of discrimination, 

15 harassment, retaliation, sexual harassment, those kinds of 

16 ! investigations as well. 

17 SENATOR AYALA: Thank you. 

18 CHAIRMAN LOCKYER: All right, anything additional, 

19 Senators. 

20 Is anyone present who wishes to comment either for or 

21 against confirmation. 

22 Senator Beverly. 

2 3 SENATOR BEVERLY: Move we recommend confirmation. 

24 CHAIRMAN LOCKYER: All right, we have that motion. 

25 Let's call the role. 

2 6 SECRETARY WEBB: Senator Ayala. 

27 SENATOR AYALA: Aye. 

28 SECRETARY WEBB: Ayala Aye. Senator Lewis. Senator 



35 



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Petris. 



SENATOR PETRIS: Aye. 

SECRETARY WEBB: Petris Aye. Senator Beverly. 

SENATOR BEVERLY: Aye. 

SECRETARY WEBB: Beverly Aye. Senator Lockyer. 

CHAIRMAN LOCKYER: Aye. 

SECRETARY WEBB: Lockyer Aye. Five to zero. 

CHAIRMAN LOCKYER: Good luck, sir. 

MR. O'BRIEN: Thank you very much, sir. Thank you, 
[Later Senator Lewis voted to 
confirm both nominations/ making 
the final vote on each 5-0.] 
[Thereupon this portion of the 
Senate Rules Committee hearing was 
terminated at approximately 4:03 P.M.] 
— ooOoo — 



36 

1 CERTIFICATE OF SHORTHAND REPORTER 

2 

3 I, EVELYN J. MIZAK, a Shorthand Reporter of the State 

4 of California/ do hereby certify: 

5 That I am a disinterested person herein; that the 

6 foregoing transcript of the Senate Rules Committee hearing was 
reported verbatim in shorthand by me, Evelyn J. Mizak, and 

8 thereafter transcribed into typewriting. 

9 I further certify that I am not of counsel or 

10 attorney for any of the parties to said hearing, nor in any way 

11 interested in the outcome of said hearing. 

12 IN WITNESS WHEREOF, I have hereunto set my hand this 

13 ,. K < " day of ; 1 ( ^V? ci^ , 1996. 

14 

15 
16 

17 - C 




ter 



— EVELYirT. MIZi 
"Shorthand -Reporter 
19 

20 

21 

22 

23 

24 

25 

26 

27 

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HEARING 

SENATE RULES COMMITTEE 

STATE OF CALIFORNIA 



•MTe> n>e 



MAY - 1 199 6 

PUBUC LIBRARY 



PT. 




STATE CAPITOL 

ROOM 113 

SACRAMENTO, CALIFORNIA 

MONDAY, MARCH 18, 1996 
2:06 PM 



297-R 



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SENATE RULES COMMITTEE 
STATE OF CALIFORNIA 



HEARING 



STATE CAPITOL 

ROOM 113 

SACRAMENTO, CALIFORNIA 



MONDAY, MARCH 18, 1996 
2:06 P.M. 



Reported by 



Evelyn J. Mizak 
Shorthand Reporter 



11 



APPEARANCES 

MEMBERS PRESENT 

SENATOR WILLIAM LOCKYER, Chair 

SENATOR ROBERT BEVERLY, Vice Chair 

SENATOR RUBEN AYALA 

SENATOR JOHN LEWIS 

SENATOR NICHOLAS PETRIS 

STAFF PRESENT 

GREG SCHMIDT, Executive Officer 

PAT WEBB, Committee Secretary 

RICK ROLLENS, Consultant on Bill Referrals 

NANCY MICHEL, Consultant on Governor's Appointments 

ALSO PRESENT 

DWIGHT HELMICK, Commissioner 
California Highway Patrol 

SENATOR QUENTIN KOPP 

RON SNIDER, President 

California Association of Highway Patrolmen 

AL DAVILA, Lobbyist 

California Association of Highway Patrolmen 

JOSEPH P. MUNSO, Chief Deputy Director 
Department of Health Services 

TERRI THOMAS 

California Association of Public Hospitals and Health Systems 

DAVID A. ROHY, Member 

State Energy Resources Conservation and Development Commission 

BOB RAYMER, Technical Director 
California Building Industry Association 



Introduction by SENATOR QUENTIN KOPP 1 

Background and Experience 2 

Questions by SENATOR AYALA re: 



111 

1 INDEX 

2 Page 

3 Proceedings 1 

4 Governor's Appointees: 

5 DWIGHT HELMICK, Commissioner 
California Highway Patrol 1 

6 

7 
8 
9 

Results of Merging Highway Patrol with 

10 State Police 4 

1 1 Savings from Attrition 5 

12 Statement by CHAIRMAN LOCKYER re: 

13 Disappointed in Consolidation 5 

14 Questions by SENATOR PETRIS re: 

15 Asset Forfeiture Cases 6 

16 Forfeitures Pursuant to Judgments 7 

17 Questions by CHAIRMAN LOCKYER re: 

18 Training of Assembly Sergeants of Arms 8 

19 Current Status of Computers in 

Patrol Cars I 

20 

21 

Being Held at Gate while Governor's 

22 Security Unit was in Basement Garage 10 

23 Questions by SENATOR AYALA re: 

24 Keeping up with California's Growth 10 

25 Questions by SENATOR PETRIS re: 
26 

27 
28 



Personnel Space in Capitol 9 



Effect of Increased Speed Limit on 

Freeways and Highways 11 



IV 



Witnesses in Support; 

RON SNIDER, President 

California Association of Highway Patrolmen 12 

AL DAVILA, Lobbyist 

California Association of Highway Patrolmen 13 

Motion to Confirm 14 

Committee Action 14 

JOSEPH P. MUNSO, Chief Deputy Director 

Department of Health Services 15 

Background and Experience 15 

Questions by SENATOR PETRIS re: 

Birth Defects Prevention Program 17 

Ongoing Research into Birth Defects 17 

Questions by CHAIRMAN LOCKYER re: 

AIDS Drug Assistance Program (ADAP) 18 

AIDS Drug Formularies 19 

Proportion of ADAP Recipients Who Are 

on Medi-Cal 20 

Numbers of Deputies and Chief Deputies 20 

Most Difficult Problem 21 

Witness in Support: 

TERRI THOMAS 

California Association of Public Hospitals 

and Health Systems 22 

Motion to Confirm 23 

Committee Action 24 

DAVID A. ROHY, Member 

State Energy Resources Conservation and 

Development Commission 24 

Background and Experience 24 

Questions by CHAIRMAN LOCKYER re: 

Energy Project at Mariposa County Jail 28 



Questions by SENATOR PETRIS re: 

Use of Ceramics 30 

Questions by CHAIRMAN LOCKYER re: 

Need to Re-examine Functions of 

of Energy Commission and PUC 31 

Involvement in Fuel Policy 

Discussions 32 

Witness in Support: 

BOB RAYMER, Technical Director 

California Building Industry Association 33 

Motion to Confirm 34 

Committee Action 35 

Termination of Proceedings 35 

Certificate of Reporter 36 



1 P-R-O-C-E-E-D-I-N-G-S 

2 — 00O00 — 

3 CHAIRMAN LOCKYER: Senator Kopp, you want to introduce 

4 Mr. Helmick? 

5 SENATOR KOPP: I do. Thank you, Mr. Chairman and 

6 Members . 

7 I appear for two purposes. One, formally to present 

8 Mr. Helmick, Commissioner Helmick, commonly referred to as 

9 | Spike, which I think is a term of affection rather than a 

10 ! pejorative. And to present him for recommendation for 

11 | confirmation by the State Senate as Commissioner of the 

12 \ California Highway Patrol. And two, to provide a few comments 

13 in support of such a recommendation. 

14 I've had the experience for eight years now of rather 

15 constant communication and association legislatively with the 

16 California Highway Patrol. And that covers Mr. Helmick' s 

17 predecessor as well as' him. 

18 He has been acting in his chosen, and selected, and 

19 designated position as Commissioner now for going on three 

20 | quarters of a year. That has provided ample time, as far as I'm 

21 personally concerned, to evaluate for myself his capability or 

22 ' lack of capability, his cooperation or noncooperation with the 

23 Legislature. 

24 I'm here to testify that he is probably as cooperative 

25 a person as any Legislator would want to have the benefit of 

26 insofar as a state agency which falls within the legislative 

27 jurisdiction of a policy committee or a fiscal committee. He 
2 8 sets an example in that respect. 



1 Secondly, he also enjoys the respect of people who, I 

2 guess, in today's culture we call professionals in the field of 

3 law enforcement with respect to California's highways and 

4 interstate highways. And I think that's important because it 
reflects the feeling of the people who are a part of the 

6 Department, including primarily, of course, the sworn peace 

officers who are the Highway Patrolmen and Highway Patrolwomen 

8 of California. 

9 He is experienced. His integrity has never been 

10 questioned. And he understands the legislative process from one 

11 of his prior assignments in the California Highway Patrol which 

12 antedates my service in the Senate. 

13 So, Mr. Chairman and Members, I come here with nothing 

14 but the highest words of commendation for Mr. Helmick, and with 

15 nothing but the most sincere and bona fide urging that he be 

16 recommended to the full State Senate for confirmation. 

17 And I thank you very much. 

18 CHAIRMAN LOCKYER: There's a similar letter or comment 

19 from Senator O'Connell which we'll add to the record. 
2 SENATOR KOPP: May I be excused? Thank you. 

21 CHAIRMAN LOCKYER: Did you want to start with any 

22 opening comments? 

2 3 MR. HELMICK: Senator, Mr. Chairman, thank you very 

24 much. I think I'd almost like to stop and let Senator Kopp do 

25 the talking for me, he was so eloquent and I do appreciate that. 

26 If I might just very quickly give you just a little 

27 overview of my experience, some of the things I believe that 

28 make me qualified for the position. 



1 First of all, I have been with the California Highway 

2 Patrol for 26-and-a-half years, and soon will finish my 27th 

3 year. Had a variety of assignments throughout the State of 

4 California. Probably the most interesting and the one I learned 

5 the most from was the nine years that I was privileged to spend 

6 working before the California Legislature. 

7 I have been blessed with a very strong management team 

8 j to work with. I have the gentlemen here today, if I could just 

9 quickly introduce them. The Deputy Commissioner is Bill Kelvey, 

10 | and I have two Assistant Commissioners, one from Field 

11 Operations, which is Bill Carlson, and Ted Star is from the 

12 ! Staff Operation. With people like this, anyone, I think, can 

13 succeed. They're dedicated professionals with well over a 

14 hundred years' combined service to the state of California. 

15 As to why I believe I am qualified, again, I believe I 

16 have the formal education, be it the colleges, and the FBI 

17 schools. 

18 More importantly, I have a strong belief in the people 

19 that work for California Highway Patrol. I'm proud of my 

20 | relationship with the California Association of Highway 

21 Patrolmen. They're the men and women out there every single day 

22 to do the job. I am proud of the rapport with the top 

23 management individuals in this department. And I believe very 

24 strongly in a team. 

25 I also believe very strongly in working cooperatively 

26 with this Legislature. My job is to enforce the law, not to try 

27 to interpret it or make it. I can be here today to commit to 

28 each and every one of you that I am willing any time, any place, 



1 to sit down with you, and very responsive to your needs, 

2 certainly would appreciate the support of this Committee. 

3 I'd be obviously happy to answer any questions, too, 

4 Senator, if that be your desire. 

5 CHAIRMAN LOCKYER: Okay, let's inquire. Are there 

6 questions from Members? Senator Ayala. 

7 SENATOR AYALA: We've merged the State Police with the 

8 Highway Patrol. 

9 MR. HELMICK: Yes, sir. 

10 SENATOR AYALA: I'm led to believe that would be a 

11 tremendous savings to the taxpayers of California. How has that 

12 worked out, okay? Is that working okay? 

13 MR. HELMICK: Senator, I believe it's working very 

14 well. We made a commitment to this California Legislature last 

15 year that we would save $850,000. We will save that amount of 

16 money. 

17 I think that's even more startling when you realize 

18 that some of things that were supposed to happen last July did 

19 not happen until later in the year. For example, permission to 

20 sell a couple air craft that they wanted to sell. We've had a 

21 couple contracts, one with Water Resources that has been 

22 terminated. We were required to buy some automobiles which we 

23 did not expect to buy. 

24 But even with all of that, we completely retrained each 

25 and every one of their people. And at the same token, we are 

2 6 going to be able to meet our budget, what you, the Legislature, 

27 told us to do. 

2 8 I'm convinced that the people of the state will get 



1 better service because of that training. 

2 SENATOR AYALA: The rest of the savings will come from 

3 attrition, when the State Police are retiring, and their 

4 replacements will not be required? 

5 MR. HELMICK: I think certainly there will be positions 

6 that will not be needed to be filled. 

7 More importantly, the citizens, and I'm referring to 

8 the state employees of the state, now have the services of 

9 roughly 7,000 people, before they had 200. And we're meeting 

10 with all state departments and making it very clear that we are 

11 ready to help try to enhance the safety of those employees. 

12 SENATOR AYALA: Thank you. 

13 CHAIRMAN LOCKYER: While we're on this particular 

14 topic, I might just mention that I'm disappointed in the 

15 consolidation. I think the operation is less sensitive than it 

16 used to be to the Legislature, and muscled around more by the 

17 I Governor's Office than used to be the case. And also much more 

18 political than used to be the case. 

19 So, by way of public feedback, let me just tell you, if 

20 it were up to me, I'd go back to the other system and. undo 

21 what's been done. 

22 That has nothing to do with the costs, but just an 

23 attitude that emanates from the consolidated operation with the 

24 CHP as the lead. 

25 Are there other questions that Members want to ask? 

26 Senator Petris. 

27 SENATOR PETRIS: I'm interested in the forfeiture 

28 stuff. I didn't know the Highway Patrol got into it, but I 



1 guess it's inevitable in view of some of the things you run 

2 across, your people run across. 

3 Do you know how many asset forfeiture cases the Patrol 

4 was involved in last year? 

5 MR. HELMICK: Senator, I do, and if I might just 

6 quickly indicate that we are involved in 35 drug task forces. 
We do have 26 drug dogs we're using, mainly work in our 

8 facilities and with commercial vehicles. 

9 To answer your question specifically, we were involved 

10 in 76 asset forfeiture cases last year, having an estimated 

11 value of about nine-and-a-half million dollars. 

12 However, I think it's important to note that only about 

13 four percent of that actually went through the courts and came 

14 back to the Department, 387,000, for a couple different reasons. 

15 We have a very rigid policy that in those cases that 

16 our officers come upon, we call local law enforcement in to 

17 assist, quite honestly, because most of them are in dire need 

18 of money. And we have an obligation that we will not take more 

19 than 25 percent of any seizure, and the rest will be returned to 

20 local government to assist those local allied agencies. 

21 Probably that number of 7 6 sounds somewhat small when 

22 you consider that the California Highway Patrol was rated in the 

23 nation number one on the taking away of heroin as well as 

24 methamphetamines in the United States. So, we make a lot of 

25 arrests. 

2 6 We're very careful, and we have a very rigid policy 

27 when we get involved in those asset seizures. I can assure you, 

28 we arrest many, many more times than that 7 6, but our folks are 



1 given some very rigid policy as to when they're to take the 

2 vehicles used in the case. 

3 SENATOR PETRIS: Are most of the forfeitures dealing 

4 with vehicles only? 

5 MR. HELMICK: The vast majority of them are only 

6 vehicles, sir; that's correct. 

7 SENATOR PETRIS: So, there isn't much involving, say, 

8 real property, a house where some activities are going on there? 

9 MR. HELMICK: No, Senator. In those rare cases when 

10 done, it's usually a drug task force that we may have a member 

11 on, but it's not the Department doing it. It's the task force. 

12 Usually, those task forces are made up of a DEA agent, 

13 or a Department of Justice agent, a local sheriff, local police, 

14 and we usually just give one member at the request of the local 

15 government to serve on it. 

16 SENATOR PETRIS: Are those forfeitures pursuant to 

17 either a judgement or a lawsuit that's pending, or are they done 

18 in advance of any litigation? 

19 MR. HELMICK: No, Senator. We take no forfeitures in 

20 advance. We wait until clearly they've been adjudicated by the 

21 court, the money's been adjudicated and given to this 

22 Department. We do nothing in advance. 

23 SENATOR PETRIS: I'm glad to hear that. In the past, 

24 among other agencies, we've had a few problems of premature 

25 seizures. 

26 MR. HELMICK: That is correct. 

27 SENATOR PETRIS: Thank you. 

28 MR. HELMICK: Thank you. 



8 

1 CHAIRMAN LOCKYER: This probably reflects the 

2 difference in policy between our Rules Committee and- the 

3 Assembly, but again, I know that you've recently had the 

4 Assembly Sergeant of Arms train at the CHP Academy, including 

5 fire arms training. 

6 We do not arm Sergeants on this side of the building. 

7 At least, that's our current policy. 

8 Are you familiar with that? 

9 MR. HELMICK: I am familiar with it. If I might 

10 clarify, Senator, we have not did [sic] any training. 

11 We have had the Assembly leadership come to this 

12 Department and ask if we were able to train if they came an 

13 asked us for the training. 

14 CHAIRMAN LOCKYER: So it hasn't occurred yet. 

15 MR. HELMICK: No, sir. And we have been very clear that 

16 we do not get into those policies, and recommend very strongly 

17 that they talk to their counterparts in this house. We would 

18 simply be an arm via to do the training at our Academy if, in 

19 fact, the Legislature asked us to. 

20 We have not made any recommendations. We have publicly 

21 stated we prefer them not to have weapons, if they were going to 

22 ask us for our opinion. 

23 CHAIRMAN LOCKYER: The computer systems in automobiles, 

24 patrol cars, what's the current status of all of that? 

25 MR. HELMICK: We continue — we actually have two 

2 6 projects, Senator. One of them is the ones in the cars. And 

27 right now, the Legislature gave us money to complete our Los 

28 Angeles installation, and that is working very well. 



1 The project that's probably working even better is the 

2 lap top computer program, where we actually have bought the lap 

3 top computers, assigned them to officers. They do a much more 

4 professional report quicker. 

5 And inasmuch as we are mandated to get all of the 

6 accident statistics from all local law enforcement, we have also 

7 provided them with that program, computerized program, so the 

8 reports come in in a time that's going to be much — a more 

9 costly [sic] manner of doing it, because we'll be able to gather 

10 that data instead of doing it by actual people. We'll be able 

11 to do it all by computer. 

12 The program's working very well. We have in excess of 

13 2,000 of those out now. 

14 CHAIRMAN LOCKYER: How many units? What proportion of 

15 all units is that? 

16 MR. HELMICK: I would only be estimating, Senator. I 

17 think it'd be well in the 50-60 percent. Most of the young 

18 officers are very — they like computers. It's a little 

19 different for some of us older people, but they're very versed 

20 in it. 

21 CHAIRMAN LOCKYER: Since you're handy, let me just 

22 mention, too, there's been some discussion of the State 

23 Police-CHP space in the Capitol building. This is a place that 

24 the intense competition for space is exceeded only by the Church 

25 of the Holy Sepulcher in Jerusalem. And if there ever is any 

26 opportunity to move some folks across the street or something, 

27 there's a long list waiting for space to be freed up. 

28 MR. HELMICK: If I might just mention, we are working 



10 

1 on that, and I think I've talked to your staff. Very much would 

2 like to move them and consolidate them off site. 

3 If I might just quickly on the comment you mentioned 

4 earlier, hopefully I can meet with your staff, because your 

5 concerns are bothersome to me, because that is absolutely not 

6 where I want this organization to be. And I will assure you 
that if that's how they're being perceived, we will do 

8 everything in our power to reverse that perception. 

9 CHAIRMAN LOCKYER: Well, this complaint is probably — 

10 I don't know who it trickled up to, but just my own complaint is 

11 waiting almost ten minutes at the gate because the Governor's 

12 security unit had him in the garage. Of course, he hadn't been 

13 there, and I happened to go to that garage. 

14 I'm not a threat to Pete Wilson, and I don't expect any 

15 bozo at the gate to hold the President of the Senate for ten 

16 minutes. 

17 MR. HELMICK: Nor 'do I, obviously, Senator. 

18 CHAIRMAN LOCKYER: Anyone else? 

19 SENATOR AYALA: One more question. 

20 The number of units patrolling our freeways today as 

21 compared to ten years ago, we're growing tremendously, 

22 especially down in Southern California, have we kept up with the 

23 growth in California? 

24 MR. HELMICK: Senator, it's kind of a difficult — 

25 depending on how you look at it, we were down in 1993. As you 

26 recall, the Legislature and the Governor gave us 500 officers. 

27 We are in a process of hiring those 500 officers. That will be 

28 completed by June of 1997. The Academy is running on a 



11 

1 full-time basis. 

2 So, I would say we are probably down still 75 to 100 

3 positions where we should be. We have the authority, you've 

4 been very kind in giving it to us, it's just getting them 

5 through the Academy and out on to the roadway. 

6 Unfortunately, we have anywhere from roughly 300 to 350 

7 people a year retire. We've been trying to add the 500 on top 

8 of it. 

9 As I say, the Academy is going full strength. Our 

10 classes used to be somewhere in the neighborhood of 80 officers, 

11 and now in excess of 200 officers or candidates for per class. 

12 ; So, we're doing everything in our power to get them out on the 

13 ! road as quick as we can. 

14 SENATOR AYALA: But the number of units are growing 

15 along with the need? 

16 MR. HELMICK: There has grown — you'll probably 

17 question whether it's 'growing as much as the need is, but 

18 certainly they have grown, sir. 

19 CHAIRMAN LOCKYER: Senator. 

20 SENATOR PETRIS: When I drive up here from home, I 

21 always look for the new signs so I'll know whether I'm on a 55 

22 or 65 mile road. 

23 What has been the effect of the increase? Is it too 

24 early to tell? Have there been any problems have surfaced, like 

25 more accidents or more arrests for speeding? 

26 MR. HELMICK: Senator, a couple of interesting things 

27 have occurred, and it probably is too > early to make a firm view 

28 on that, but we've been working with Senator Kopp's staff. 



12 

1 A couple things. The citations are down. I think 

2 that's more of a factor than a lot of people now who are doing 

3 the 65 to 70 or 75, where they felt comfortable, are now legal, 

4 and they're not receiving citations. So, the citations for the 
period since the new limits at the first of the year are down. 

6 So that I'm excited about. 

7 I must tell you, accidents are up, but they're not up 

8 -- the speed accidents are not up. We've had some real terrible 

9 accidents in the state where five, six, seven people were killed 

10 in one vehicle, but it was not a factor of speed. 

11 We had just one Friday night just the opposite. It was 

12 a family that stalled and left their family sitting on the 

13 freeway in Los Angeles, not moving at all, and a car came along 

14 and hit them. 

15 So, we continue to try to keep those accidents down, 

16 but I can tell you, we have not seen a significant increase, or 

17 any increase, caused on the speed limit change in the first 

18 couple months of the year. 

19 SENATOR PETRI S: Thank you. 

20 CHAIRMAN LOCKYER: All right, anyone else present who 

21 wants to comment either for or against the confirmation? Yes, 

22 sir. 

23 MR. SNIDER: Mr. Chairman, Senators, my name is Ron 

24 Snider. I'm the President of the California Association of 
2 5 Highway Patrolmen. 

26 With me is Al Davilla. 

27 MR. DAVILLA: Tell them who I am. 

28 MR. SNIDER: I think everybody knows, Al, that's why. 



13 

1 The California Association of Highway Patrolmen 

2 strongly supports Commissioner Helmick as the Commissioner of 

3 the Highway Patrol. There's several reasons for this. 

4 He started his career with the CHP as a beat officer, 

5 and he understands what it's like to do the job, from any rank 

6 in the Department. 

7 California has experienced one emergency or crisis 

8 after another during last several years, and Commissioner 

9 Helmick has proven his leadership capabilities again and again. 

10 Our officers respect Commissioner Helmick, and he has been a 

11 positive impact on morale. 

12 While the reputation of some other law enforcement 

13 agencies have suffered in past several years, the reputation of 

14 the CHP continues to prosper under the leadership of people like 

15 Commissioner Helmick. 

16 And the California Association of Highway Patrolmen do 

17 not feel that you could find anybody that could do the job and 

18 be more fit and capable of continuing the excellent job that has 

19 been performed as the Commissioner of the Highway Patrol than 

20 this gentleman here. We strongly support him. 

21 CHAIRMAN LOCKYER: Al, do you want to add something? 

22 MR. DAVILLA: Thank you, Mr. Chairman. 

23 Senators, my job here was to introduce President Ron 

24 Snider, but he proceeded me, so thank you very much. That's 

25 all. 

26 Except that I have known Spike since he was a traffic 

27 officer, and I've never been impressed with anyone as much as I 

28 have with him. We even worked together in the Legislature many 



14 

1 years ago when he first started. And we didn't always see eye 

2 to eye in every case, but he was always available, and we could 

3 talk to him, and he was very reasonable. I couldn't think of 

4 anyone. We would be hard-pressed to find a man better qualified 

5 than Spike. 

6 We would urge your confirmation. Thank you. 

7 CHAIRMAN LOCKYER: Thanks. Anyone else? Senator 

8 Ayala. 

9 SENATOR AYALA: I'm ready to move. I'd like to move 

10 that Mr. Helmick be appointed Commissioner of the California 

11 Highway Patrol. 

12 CHAIRMAN LOCKYER: All right, we have a motion to 

13 confirm. Call the roll. 

14 SECRETARY WEBB: Senator Ayala. 

15 SENATOR AYALA: Aye. 

16 SECRETARY WEBB: Ayala Aye. Senator Lewis. 

17 SENATOR LEWIS: Aye. 

18 SECRETARY WEBB: Lewis Aye. Senator Petris. 

19 SENATOR PETRIS: Aye. 

20 SECRETARY WEBB: Petris Aye. Senator Beverly. 

21 SENATOR BEVERLY: Aye. 

22 SECRETARY WEBB: Beverly Aye. Senator Lockyer. 
2 3 CHAIRMAN LOCKYER: Aye. 

24 SECRETARY WEBB: Lockyer Aye. Five to zero. 

25 CHAIRMAN LOCKYER: Thanks, Spike, good luck, and hope 
2 6 things work out well. Keep up the good job. 

27 MR. HELMICK: Thank you very much. 

28 CHAIRMAN LOCKYER: We have Mr. Munso next. 



15 

1 Good afternoon. Did you want to start with any comment 

2 at all? 

3 MR. MUNSO: Yeah, I guess I'll just briefly — I don't 

4 have any certified introduction here. I'll just go through 

5 briefly a little bit about myself and my experience for the 

6 Committee. 

7 Thank you, Mr. Chairman, Senators, for having the 

8 i opportunity to appear and consider my appointment for the 

9 position of Chief Deputy Director of the Department of Health 

10 ! Services. 

11 I'm a native Californian, and I've been employed by the 

12 ; state of California for over 24 years. I'm a dedicated and 

13 committed public servant who believes in the importance of 

14 dedicated service, both to the taxpayers and to the recipients 

15 ! of governmental services. 

16 Virtually my entire career has been spent in the Health 

17 and Welfare arena in state government, where I've held a variety 

18 of policy making positions. At the Department of Social 

19 Services, I worked in a variety of administrative assignments 

20 until my appointment as Special Assistant to the Chief Deputy 

21 Director, where I represented the state with a variety of state, 

22 ; federal, and local officials. 

23 I went on to become the Chief of the Employment Program 

24 Branch to implement the Greater Avenues for Independence 

25 program, which is known as GAIN in the State of California, and 

26 which is still in existence today. 

27 After a brief assignment outside of the Health and 

28 Welfare arena, I returned to become Chief of the Financial 



16 

1 Management Branch in the Department of Social Services, where I 

2 represented the Department in both with state-local officials, 

3 as well as the Legislature regarding the $8 billion Social 

4 Services budget. 

5 Since 1991, I've been the Deputy Director of 

6 Administration in the Department of Health Services, and now, 
since May of 1995, Chief Deputy Director of the Department. 

8 I have been part of the formulation of strategic and 

9 long-term planning within the Department, and I've played a 

10 strong role in supporting the administration's prevention agenda 

11 and health programs. 

12 I'm involved in moving the Medi-Cal program towards a 

13 new delivery system, which will create the largest managed care 

14 delivery system for Medicaid recipients in the nation. 

15 I've also overseen the implementation of the teen 

16 pregnancy prevention initiative contained in this year's budget, 

17 as well as the rollout of the shelter-based domestic violence 

18 program enacted a few years ago. 

19 As Chief Deputy Director, I also have direct management 

20 over public health services, primary care and family health, 

21 medical care services, licensing and certification 

22 responsibilities, as well as a full range of support services 

23 for the Department. 

2 4 Throughout my career, I have demonstrated the 

25 willingness to work cooperatively with the Legislature and 

2 6 constituency groups. I am a firm believer of open government. 

27 It is my belief that the work of the Department of Health 

28 Services is vital to the well being of all Californians, and I'm 



17 



1 proud to be a part of this organization. 

2 Thank you for consideration of my appointment. 

3 CHAIRMAN LOCKYER: Thank you. 

4 Comments, questions. 

5 SENATOR PETRIS: I'm interested in the birth defects 

6 prevention program. I carried legislation on the Birth Defects 

7 Prevention Act, something like that. 

8 I notice that the resources allocated to that part of 

9 the program have been reduced. Is that just a monetary fiscal 

10 necessity, or is there some other reason? 

11 MR. MUNSO: Actually, that was reduced back in 1992 

12 during the tough fiscal times. We reduced some of the moneys 

13 that we had allocated to the Public Health Foundation, who 

14 provided some of the surveillance work for us out locally. At 

15 the time, it was a matter of necessity. 

16 That program has currently tried to get voluntary-like 

17 j kinds of service levels from various hospitals and other 

18 entities out locally to try and supplant the information that we 

19 believe was critical to ensure that California, who has the 

20 leading edge in terms of really the only birth defects 

21 monitoring in the country, that CDC monitored [sic] ours off 

22 of, and so it still is viewed as the model in the nation today. 

23 It's still viable, and it's still operational in the majority of 

24 California. 

25 SENATOR PETRIS: Is there much research still going on? 
2 6 MR. MUNSO: There has been much research. Recently, 

27 there was some research related to tobacco use, some research 

28 related to clusters of birth defects in certain areas of 



18 

1 California. 

2 That data base is used by a wide variety of people, 

3 both nationally as well as within the UC system, to help assist 

4 them in doing the research. It's the first kind of total global 

5 data system for birth defects in the nation. 

6 So, yes it's still being used for that purpose. 

7 CHAIRMAN LOCKYER: Other questions? 

8 Let me ask you about ADAP the AIDS Drug Assistance. 

9 MR. MUNSO: Yes. 

10 CHAIRMAN LOCKYER: I guess there's a financial 

11 shortage. 

12 MR. MUNSO: Uh-huh. 

13 CHAIRMAN LOCKYER: How much is it, and what response 

14 could we anticipate? 

15 MR. MUNSO: We think currently the shortfall ranges 

16 from anywhere between six to nine million dollars in the current 

17 year. It's made up of a couple of — 

18 CHAIRMAN LOCKYER: The current year. 

19 MR. MUNSO: Current budget year. 

20 It's made up of a couple things. One is just the 

21 increased level of drug assistance programs locally that goes to 

22 AIDS patients to maintain their prescriptions. The other is the 

23 addition of a couple of new drugs that the FDA has recently 
2 4 approved which are very expensive. 

25 In prior years when the FDA had approved new therapies, 

2 6 they were always in substitution of previous drugs that AIDS 

27 patients took. 

28 Now they're combination therapies, as they call it. In 



19 

1 some cases, is you're taking AZT, these drugs go on top of it. 

2 CHAIRMAN LOCKYER: The cocktail. 

3 MR. MUNSO: Yeah. They're experiencing — so, we're 

4 experiencing much larger growth than we ever had. 

5 CHAIRMAN LOCKYER: Have those been added, then to the 

6 formulary? 

7 MR. MUNSO: They have been added to the formulary in 

8 Medi-Cal. 

9 CHAIRMAN LOCKYER: 3TC? 

10 MR. MUNSO: 3TC and Sinquinavir. They have been added 

11 to the formulary in Medi-Cal, and the AIDS Drug Assistance 

12 Program, which is kind of the state-only piece of it, we're in 

13 the process of trying to figure out how we're going to make 

14 those drugs available both in the current year and the budget 

15 I year. It's kind of a combination problem. 

16 We will be submitting something shortly through the 

17 administration to the Legislature in terms of our plan. There's 

18 some ways to deal with some additional federal funds that are 

19 coming down, some more aggressive rebates on drug manufacturers 

20 who have been cooperative in terms of trying to get us more 

21 rebates, and some other administrative things we can take. So, 

22 the Legislature will be seeing probably a Section 28 request, or 

23 something, in the near future. 

24 And we've been working with large a constituency group, 

25 task group, to also make recommendations to us. We had our 

26 first meeting in early March to make recommendations to us, how 

27 we can best look at this program in the future, because the 

28 characteristics of this program are changing in that people 



20 

1 living longer, people are staying to the program longer. It's a 

2 relatively rich program in terms of who we cover in terms of the 

3 income levels. And there's a lot of good reasons for that. 

4 CHAIRMAN LOCKYER: In terms of ADAP. 

5 MR. MUNSO: Yes, in terms of ADAP. 

6 CHAIRMAN LOCKYER: So, that's how you have this 

7 Medi-Cal population that gets it? 

8 MR. MUNSO: Right. 

9 CHAIRMAN LOCKYER: What proportion would be Medi-Cal 

10 versus the remainder? 

11 MR. MUNSO: Right now it's about 60 percent are 

12 Medi-Cal, 40 percent are ADAP. It's critical, though. To get 

13 on Medi-Cal, you've had to really progress in the disease, and 

14 we don't want that to happen. We have people who are on ADAP 

15 right now who currently can work, can be productive, et cetera. 

16 Once you're on Medi-Cal, that means you have really 

17 passed the threshold of the' disability system and Social 

18 Security, so it's a good investment up front in terms of how to 

19 do that. So, we're trying to figure out how to afford it. 

2 CHAIRMAN LOCKYER: Is there more than one Chief Deputy 

21 Director? 

22 MR. MUNSO: In the — prior, a couple years ago, there 

23 were two chief deputies. Now there's just one. 

24 CHAIRMAN LOCKYER: How many deputies? 

25 MR. MUNSO: Deputies, there are — I think there's 

26 roughly around fifteen. 

2 7 CHAIRMAN LOCKYER: How does it work? 

2 8 MR. MUNSO: They all report through me to Director 



21 

1 Belshe. 

2 CHAIRMAN LOCKYER: So, for the last almost a year, nine 

3 months/ whatever, that's what's been happening. 

4 MR. MUNSO: That's what's been happening. 

5 CHAIRMAN LOCKYER: What was the most difficult problem 

6 you had to work with during that time? 

7 MR. MUNSO: Gees, there's so many. 

8 CHAIRMAN LOCKYER: What comes to mind? 

9 MR. MUNSO: I think what comes to mind is always the 

10 budget situation, and trying to have — having one of the 

11 largest budgets state government, people always come to us to 

12 try and deal with solutions in terms of tough fiscal times, and 

13 working those things out through the Legislature and through the 

14 administration in terms of our budget, and trying to maintain 

15 services to eligible populations. 

16 I think one of the things we're proudest of is, we have 

17 not cut eligibles from the Medi-Cal program during these tough 

18 times. 

19 I think some of the other trying times are always 

20 those — 

21 CHAIRMAN LOCKYER: Excuse me, but it was we that didn't 

22 cut, not you. That is, the Governor proposed it numerous times. 

23 We said no, but I understand. And I hope you feel like that's 

24 what you would prefer in terms of your own policy perspectives. 

25 Go ahead. 

2 6 MR. MUNSO: In terms of — I think the tough things are 

27 the day-to-day surprises in the public health field that really 

28 are broad-based population kinds of health issues with the 



22 

1 general public that we take very seriously, from the Hanta virus 

2 to the E coli situations, to samonella issues with eggs. 

3 I mean, there's a variety of tough issues that you have 

4 to need no walk the line in terms of public health and what 

5 makes sense. 

6 CHAIRMAN LOCKYER: Where did Mr. Joseph go? 

7 MR. MUNSO: Mr. Joseph is now the Executive Director 

8 for the Board of Medical Quality Assurance, the Medical 

9 Licensing Board. 

10 CHAIRMAN LOCKYER: Other questions. 

11 Is there anyone present who wants to comment either pro 

12 or con? 

13 MS. THOMAS: Mr. Chairman and Members, Terri Thomas on 

14 behalf of the California Association of Public Hospitals and 

15 Health Systems. 

16 I'm here today in support of the nomination of Mr. 

17 Munso as Chief Deputy Director. 

18 I think that Mr. Munso alluded in his comments to one 

19 of the reasons that we're here, and that was the phrase that he 

20 used, open government. 

21 Senator Lockyer, you also made reference to some of the 

22 difficult budget situations that we faced over the past several 

23 years. 

24 These situations have been most trying for the public 

25 hospital safety net system in California. As you can imagine, 
2 6 we have not always seen eye to eye with this administration on 
27 some of the proposals. 

2 8 However, I have to emphasize that during the time that 



23 

1 Mr. Munso acted as the chief budget spokesperson for the 

2 Department, until this very day, when he is acting as Chief 

3 Deputy Director, he has never denied the members of my Board of 

4 Directors an opportunity to discuss with him, very candidly and 

5 openly, the problems that they are facing and potential 

6 solutions to mitigate those problems. 

7 I'm sure that he has not always welcomed the 

8 opportunity to appear before our board. It's probably not 

9 always been the most pleasant of situations, but he truly has 

10 opened his office to us. And we do feel that he is a model in 

11 this regard for public servants in California. 

12 So, we are pleased to be here today to speak in support 

13 of him. 

14 CHAIRMAN LOCKYER: Is San Vicente Hospital in your 

15 group? 

16 MS. THOMAS: No, Senator, it's not. It's a private 

17 hospital. 

18 CHAIRMAN LOCKYER: That's how they could give $50,000 

19 to an Assembly candidate. They have too much money in that 

20 proprietary hospital universe. I think we could take another 

21 look and save some money. 

22 Well, Senator Beverly. 

23 SENATOR BEVERLY: I'm prepared to move we recommend 

24 confirmation. 

25 CHAIRMAN LOCKYER: We have motion to that effect. 

26 Let's call the roll. 

27 SECRETARY WEBB: Senator Ayala. 

28 SENATOR AYALA: Aye. 



24 

1 SECRETARY WEBB: Ayala Aye. Senator Lewis. 

2 SENATOR LEWIS: Aye. 

3 SECRETARY WEBB: Lewis Aye. Senator Petris. 

4 SENATOR PETRIS: Aye. 

5 SECRETARY WEBB: Petris Aye. Senator Beverly. 

6 SENATOR BEVERLY: Aye. 

SECRETARY WEBB: Beverly Aye. Senator Lockyer. 

8 CHAIRMAN LOCKYER: Aye. 

9 SECRETARY WEBB: Lockyer Aye. Five to zero. 

10 CHAIRMAN LOCKYER: Good luck. 

11 Mr. Rohy, good afternoon, sir. How are you today? 

12 MR. ROHY: Except for being a bit nervous, Senator, I 

13 feel fine. 

14 CHAIRMAN LOCKYER: Take a deep breath. 

15 I'm trying to figure out your business currently? 

16 MR. ROHY: I'm a Commissioner with the California 

17 Energy Commission. 

18 CHAIRMAN LOCKYER: That's full-time since a year ago? 

19 MR. ROHY: May of 1995, sir. 

20 CHAIRMAN LOCKYER: Well, do you want to start with any 

21 opening comments? 

22 MR. ROHY: Yes, sir. 

23 Thank you, Mr. Chairman and Senators. It's my pleasure 

24 to appear here before you today to seek confirmation of my 

25 position as Commissioner of the California Energy Commission. 

26 As you're well aware, the Warren-Alquist Act requires that each 

27 Commissioner have specific skills, and the position that I have 

28 been appointed to requires that an engineer/scientist be put 



25 

1 into that position. 

2 As way of background for that, those qualifications, 

3 I'd like to say that I am a native Californian. I grew up in 

4 Santa Barbara, went to the University of California at Santa 

5 Barbara, where I received a degree in physics. 

6 I did escape the state to do my graduate work in New 

7 York for five years, which convinced me even more to come back 

8 to California. 

9 I did work at the California — excuse me — the 

10 Lawrence Livermore Laboratory for about two-and-a-half years in 

11 the late '60s, doing work on nuclear devices, as it's 

12 euphemistically called. 

13 Budget crisis — 

14 CHAIRMAN LOCKYER: It's the bomb factory. 

15 MR. ROHY: You're absolutely correct, sir. 

16 CHAIRMAN LOCKYER: They won't tell me what critical 

17 mass is now. When I learned, it was 22.5, but now it's tinier. 

18 I don't want to get you in trouble. 

19 MR. ROHY: We could talk about that privately. 

20 CHAIRMAN LOCKYER: It's probably in some publication 

21 somewhere, if I knew where to look. 

22 MR. ROHY: I'm sure it is, on the Internet. 

23 CHAIRMAN LOCKYER: Excuse me. Go ahead, sir. 

24 MR. ROHY: Thank you. 

25 But in 1970, when a severe budget crisis came along, it 
2 6 was my opportunity to pursue a career in private industry, and I 

27 went to Solar Turbines in San Diego, who, I believe, I think you 

28 visited in the not too distant past. 



26 

1 CHAIRMAN LOCKYER: Yes, they're extraordinary. 

2 MR. ROHY: There I was hired to do research .and 

3 instrumentation to help the efficiency and the emissions of 

4 their gas turbine product line. 

5 For the other Senators here who have not visited them, 

6 they have nothing to do with solar energy. The name is purely 
because the sun shines in San Diego, I believe. So, unless you 

8 have questions about that, that's the reason. 

9 At Solar Turbines, my work was primarily in engineering 

10 and in science, and devoted towards reducing the emissions of 

11 their product line. In many of the projects I worked in, we 

12 reduced the emissions of their products by a factor of 10, from 

13 a level of 200 down to about 25, to give you some idea. 

14 At the same time, I was involved in efficiency 

15 improvements in the introduction of technology, such as ceramic 

16 technologies, which are, in fact, a new industry here in 

17 California, so there* re jobs involved there. 

18 The culmination of my career at Solar was my last 

19 position there, where I was the Director of Advanced Turbine 

20 Systems, working on a public-private partnership, to work with 

21 the U.S. Department of Energy. And in that position, we put a 

22 proposal together to lower the emissions even more on their 

23 product line, and to increase the efficiency considerably. 

24 I'm proud to say that that proposal won, and there's a 

25 private-public partnership now operating in San Diego, where 

26 both sides, the private and public side, are putting in $67 

27 million, which is going into the — a significant portion is 

28 going into the California economy. 



27 

1 So, while I was at Solar, I was also involved in many 

2 management issues, and I had some training at the MIT Sloan 

3 School of Business on managing technological organizations. I 

4 went to the Center for Creative Leadership in North Carolina, a 

5 very fine institution. 

6 CHAIRMAN LOCKYER: How long were you there? 

7 MR. ROHY: That was a one-week program, Senator. 

8 CHAIRMAN LOCKYER: It seemed worthwhile? 

9 MR. ROHY: It was definitely worthwhile. It was — I 

10 went in with trepidation into the program. I was afraid of many 

11 of the programs run by psychologists, being a physical scientist 

12 myself. They handled it very professionally, and I thought 

13 ! everyone who was serious about improving their management style 

14 came out with an improvement path. That is not inexpensive, 

15 though. 

16 When the Governor's offer came along for the 

17 appointment to this job, I had submitted the winning proposal. 

18 I was at the point where I'm not ready to manage a large 

19 project. I have done that in my life. I did not want to be the 

20 program manager. So, this appointment was an appropriate 

21 appointment. 

22 I feel, therefore, that I do have the qualifications, 

23 both in the science and engineering and management areas for 

24 this very important job in the public sector, and I believe that 

25 public service is something that every citizen should aspire to 

26 at some point this their career. 

27 As an Energy Commission, I feel my duty is to all 

28 Californians, to take actions to assure safe, reliable energy 



28 

1 and the effective use of that energy that has the least impact 

2 on our environment. 

3 I've learned over the years that there's a lot to know 

4 about both environmental and energy issues. I don't come here 

5 saying I know it all, not nearly all of it. So, as part of my 

6 job here, I feel that it is very important to listen to others, 
and to look at the societal effects of what we're doing, and 

8 blend those with the scientific facts that I think I bring to 

9 the job. 

10 During the ten months that I've been to the Commission, 

11 I have taken the opportunity to visit several energy projects 

12 within the state of California and talking to the local people 

13 about what has worked, what hasn't worked. I visited the 

14 Mariposa County Jail and looked at their energy projects, which 

15 was a very enlightening process. 

16 CHAIRMAN LOCKYER: What are they doing? 

17 MR. ROHY: They built a three-and-a-half million dollar 

18 jail, which to them is a very large project in their district. 

19 And they decided up front to make it a very energy efficient 

20 building and process, so they employed California Energy 

21 Commission and private consultants when they designed the 

22 building to minimize the use of energy and maximize the comfort 

23 for the inmates and staff of the organization. 

24 CHAIRMAN LOCKYER: How did they do it? What were the 

25 basic ideas? 

2 6 MR. ROHY: They used various insulation techniques. 

27 They also had sky lighting in there. Some of the sky lighting 

2 8 from natural lighting worked; some of it didn't. 



29 

1 They found out in one case where the sky light was 

2 directly over a metal table that was bolted to the ground and 

3 got so hot that no one could sit at it. Various small things 

4 that are very important to them. 

5 They had absorption chilling in the building, and 

6 over-all, they designed it for minimum wall space, good 

7 insulation. 

8 And they have three people, I believe, in their own 

9 public works staff. So, it is very important that it be 

10 maintainable. 

11 To me, examples like that are very important, because 

12 those are the people that are making things happen in this 

13 state, and working with those local people is a key part of the 

14 job. 

15 I would like to conclude with my current assignments at 

16 the Commission. I am the presiding Commissioner on the 1996 

17 Electricity Report. I'm presiding Commissioner on the Biannual 

18 Energy Policy Report, which I think is one of the most critical 

19 reports for state now. 

20 I am also participating in the Efficiency Standards 

21 Committee, the Conservation Committee, and the Siting and 

22 Regulatory Affairs Committees. 

23 As a part of my job, I am on the Board of Directors of 

24 Safe Bidco, the state-chartered financial agency for small 

25 business. 

26 I thank you for this opportunity to present myself 

27 before you today. 

28 CHAIRMAN LOCKYER: Thank you. 



30 

1 Yes, sir. 

2 SENATOR PETRIS: I have two or three areas I'm 

3 interested in. 

4 Your reference to ceramics [could you tell us I caught] 

5 my attention. Is that like the nose cone in the rockets that 

6 come back from space? What's the use of ceramics? 

MR. ROHY: They're very similar to those materials, 

8 Senator. 

9 They're used, however, in the gas turbine engine in the 

10 combuster liner, and in the nozzle section, and other parts that 

11 rotate in the hot gas flow of the gas turbine engine. 

12 SENATOR PETRIS: Like an insulator? 

13 MR. ROHY: In this case, they're actually a structural 

14 material. They replace what is today a metal material that's 

15 highly cooled with air. That air is very expensive from an 

16 efficiency point of view to produce. So, the ceramic component 

17 replaces -- an uncooled ceramic component replaces a metal part 

18 that has had to be cooled in the past. So, it increases the 

19 efficiency of the product. 

20 SENATOR PETRIS: How long has that been in use? 

21 MR. ROHY: They are just going through testing at Solar 

22 Turbines. A company in Arizona has some that are actually 

23 flying in auxiliary power units today, so it is — 
2 4 SENATOR PETRIS: Just starting. 

25 MR. ROHY: — just starting, sir. 

2 6 SENATOR PETRIS: You know, we went through a period of 

27 conservation, a very big program throughout the state, beginning 

28 with the state government, conservation of energy. And there 



31 

1 was a word for it which I don't remember, re- something or 

2 other. Can you help me out? 

3 MR. ROHY: I apologize, I cannot. 

4 SENATOR PETRIS: I apologize. I should know it because 

5 we used the term a lot here in the beginning of the energy 

6 savings. I'm trying to restore my knowledge. Usually I'm 

7 trying to broaden it; now I'm trying to restore it. It's not 

8 working. 

9 Can anybody help me out? 

10 MR. ROHY: Somebody in the audience said demand side 

11 management. 

12 CHAIRMAN LOCKYER: Sorry, flunked. Come back next 

13 year. 

14 MR. ROHY: That was the key question? 

15 CHAIRMAN LOCKYER: That was it. We all flunked, too. 

16 SENATOR PETRIS: Including the one who asked the 

17 question. 

18 Thank you. 

19 CHAIRMAN LOCKYER: There's a suggestion that as we 

20 enter this new phase of market competition in our energy rather 

21 than the traditional roles, that maybe the functions of the 

22 Energy Commission and the PUC need to be re-examined. 

23 Have you had an opportunity to think at all about that 

24 institutional environment, and what changes, if any, you'd 

25 suggest? 

26 MR. ROHY: Mr. Chairman, I have thought about it. I 

27 certainly am not an expert at this point, though, so I don't 

28 have the complete answer for you today. 



32 

1 Let me suggest that there are differences between the 

2 two organizations in how they act. My observations are that the 

3 California Public Utilities Commission is an agency that focuses 

4 on the regulation of investor-owned utilities, and regulation is 

5 a key part of their corporate culture, if I could use that 

6 generic term. 

7 Whereas, the California Energy Commission, while we 

8 have regulatory — approvals and regulatory duties, we do other 

9 things, such as conservation program for the State of 

10 California. We work on research and development. So, that 

11 creates a different culture within the organizations. 

12 I have thought about how those cultures could be 

13 blended, and I do not have an answer for that. I think that's 

14 something that should be done very carefully. 

15 The reason I say that, as we go through restructuring 

16 of the electric utility industry, I believe it is imperative 

17 that all of us create an atmosphere of stability here in this 

18 government organization, so that the industry that is trying to 

19 restructure knows that there is a certain path that they can 
2 have a foundation for going on. We want to make sure that we 

21 have a reliable and safe power system in the future. 

22 So, my only advice or suggestions would be that we go 

23 carefully as we go ahead and not take — chew the entire apple 

24 in one bite. That it is something that must be considered step 

25 by step as we go ahead. 

2 6 CHAIRMAN LOCKYER: There's been debate, I guess, before 

27 both Air Resources and the Energy Commission on fuel policy. 

2 8 The most recent one, I think, is ethanol v. methanol. Have 



33 

you been involved this those discussions at all? 

MR. ROHY: No, sir, I have not been involved. 

CHAIRMAN LOCKYER: Maybe it was ARB that was doing it. 

Other questions? 

Anyone present who wishes to comment? 

MR. RAYMER: Thank you, Mr. Chairman, Committee 
Members . 

I'm Bob Raymer, Technical Director with the California 
Building Industry Association. 

I've represented the California home builders before 
the Energy Commission and the Public Utilities Commission for 
the last 14 years. So, I've had a good chance to see how both 
agencies work, and interact, and sometimes don't interact. 

I must say, over last year-and-a-half to two years, the 
Energy Commission has embarked on a very service-oriented type 
of an approach in dealing with the private sector. 

A case in point, in the last six months, the CEC has 
joined with the private sector, the building industry and a few 
other groups, in procuring funding from the federal government 
to embark on a rather ambitious training and education program 
of our own membership. 

This is helping us substantially with the construction 
defect problem, the point being, noncompliance with the code 
today is effectively a construction defect five or six years 
down the road. By getting out there and training our foremen on 
the site, our site superintendents, our product purchasers, 
we're effectively contacting the people who have not been 
trained or educated on these standards at all for the last 



34 

1 decade. This is completely unprecedented. 

2 Other states are beginning to look at the immediate 

3 success that we're already seeing happen in California. 

4 The other case in point is, rather than focusing on 

5 continually tightening the standards which have been tightened 

6 five times in the last 13 years, this effort to focus on 
implementation and education is now helping the consumer realize 

8 the benefits. After all, if the building officials do not 

9 understand the regulations, if the builders and the architects 

10 don't understand the regulations, whatever 's on the paper is 

11 irrelevant. It's simply paper savings. By getting out there in 

12 the field and actually helping us comply, it's really proving 

13 benefit already. 

14 With that, thank you very much. 

15 CHAIRMAN LOCKYER: Thank you. 

16 Senator Beverly. 

17 SENATOR BEVERLY: Move we recommend confirmation. 

18 CHAIRMAN LOCKYER: What a reliable motion. Call the 

19 roll. 

20 SECRETARY WEBB: Senator Ayala. 

21 SENATOR AYALA: Aye. 

22 SECRETARY WEBB: Ayala Aye. Senator Lewis. 

23 SENATOR LEWIS: Aye. 

24 SECRETARY WEBB: Lewis Aye. Senator Petris. 

25 SENATOR PETRIS: Aye. 

2 6 SECRETARY WEBB: Petris Aye. Senator Beverly. 

27 SENATOR BEVERLY: Aye. 

28 SECRETARY WEBB: Beverly Aye. Senator Lockyer. 



35 



CHAIRMAN LOCKYER: Aye. 

SECRETARY WEBB: Lockyer Aye. Five to zero. 

CHAIRMAN LOCKYER: Good luck. 

MR. ROHY: Thank you, sir. 

[Thereupon. This portion of the 
Senate Rules Committee hearing was 
terminated at approximately 3:10 P.M.] 
— 00O00 — 



36 

1 CERTIFICATE OF SHORTHAND REPORTER 

2 

3 I, EVELYN J. MIZAK, a Shorthand Reporter of the State 

4 of California, do hereby certify: 

5 That I am a disinterested person herein; that the 

6 foregoing transcript of the Senate Rules Committee hearing was 
reported verbatim in shorthand by me, Evelyn J. Mizak, and 

8 thereafter transcribed into typewriting. 

9 I further certify that I am not of counsel or 

10 attorney for any of the parties to said hearing, nor in any way 

11 interested in the outcome of said hearing. 

12 , IN WITNESS WHEREOF, I have hereunto set my hand this 

13 r ~~ , 1996. 
14 
15 
16 
17 



// day of ^CsteuJ 



/-- 





ttei 



( _>HEVELYN J. MIZAK 

Shorthand Reporter 
19 

20 

21 

22 

23 

24 

25 

26 

27 

28 



297-R 

Additional copies of this publication may be purchased for $3.25 per copy 
(includes shipping and handling) plus current California sales tax. 

Senate Publications 

1020 N Street, Room B-53 

Sacramento, CA 95814 

(916)327-2155 

Make checks payable to SENATE RULES COMMITTEE. 
Please include Stock Number 297-R when ordering. 



rvs ■ (I 



/ 






DOC* J it- »et *"—«-> ^~ 
MAY - 1 1996 

SAi o 

PUBLSC LIBRARY 



PT. 



^ 



HEARING 

SENATE RULESCOMMITTEE 

STATE OF CALIFORNIA 




STATE CAPITOL 

ROOM 113 

SACRAMENTO, CALIFORNIA 

MONDAY, APRIL 15, 1996 
2:30 PM 



298-R 



SENATE RULES COMMITTEE 
STATE OF CALIFORNIA 



HEARING 



STATE CAPITOL 

ROOM 113 

SACRAMENTO, CALIFORNIA 



MONDAY, APRIL 15, 1996 
2:30 P.M. 



Reported by 



Evelyn J. Mizak 
Shorthand Reporter 



11 



APPEARANCES 

MEMBERS PRESENT 

SENATOR WILLIAM LOCKYER, Chair 

SENATOR ROBERT BEVERLY, Vice Chair 

SENATOR RUBEN AYALA 

SENATOR JOHN LEWIS 

SENATOR NICHOLAS PETRI S 

STAFF PRESENT 

GREG SCHMIDT, Executive Officer 

PAT WEBB, Committee Secretary 

RICK ROLLENS, Consultant on Bill Referrals 

NANCY MICHEL, Consultant on Governor's Appointments 

ALSO PRESENT 

P.G. CONLON, Member 

California Transportation Commission 

SENATOR QUENTIN KOPP 

HUGH HEWITT, Member 

South Coast Air Quality Management District Board 

JOHN WHITE 
Sierra Club 

MARK ABRAMOWITZ, President 
Community Environmental Services 

GARY PATTON, General Counsel 
Planning and Conservation League 

JOHN McCAULL, California Legislative Director 
National Audubon Society 

ANN M. VENEMAN, Secretary 
Department of Food and Agriculture 

PETER G. STAMISON, Director 
Department of General Services 

ALLEN AMARO 

Disabled Veterans Business Enterprise Network 

PAUL GUERRERO 
UMBE 



Ill 



STEVE OLSEN, Chief Deputy 
Department of General Services 

DONALD PARKS, President and CEO 
Information Systems Services 

4 Applied Technology, Inc. 

5 ALLEN DAVENPORT 
Service Employees International Union 

Eppie Johnson, President and Founder 
Eppie's Restaurants 



s 

9 
10 
11 
12 
13 
14 
15 
16 
17 
18 
19 
20 
21 
22 
23 
24 
25 
26 
27 
28 



IV 

INDEX 

Page 

Proceedings ! 

Governor's Appointees: 

P. G. CONLON, Member 

California Transportation Commission 1 

Introduction by SENATOR QUENTIN KOPP 1 

Background and Experience 2 

Questions by SENATOR PETRIS re: 

Ability to Serve in Two Capacities, 

on CTC and PUC 5 

Questions by SENATOR AYALA re: 

Sufficiency of Funds to Highway 

Maintenance , etc 5 

Bond Issues vs. Gasoline Sales Tax 6 

Reluctance to Put in Temporary 

Sales Tax to Take Care of Retrofitting 7 

Voters Didn't Have Choice between Bond 

or Sales Tax Increase 8 

Questions by CHAIRMAN LOCKYER re: 

Caltrans' Estimated Costs of Major 

Projects vs. Reality 9 

Need for Caltrans to Discipline Their 
Forecasting 9 

Motion to Confirm 9 

Committee Action 10 

HUGH HEWITT, Member 

South Coast Air Quality Management District 10 

Background and Experience 10 

Questions by SENATOR LEWIS re: 

Reasons Why AQMD Wilingly Violated 

Intent of Law for a Failed Strategy 13 

Support for Direct Source Regulation 14 



Justification for Forcing Employers 

that Do Not Create Smog to Engage in 

District ' s Programs 14 

Questions by SENATOR AYALA re: 

Contact with People in Opposition 15 

Belief that Southern California Has 

One of Worst Air Pollution Problems in 

Country 15 

Support for State Legislative 

Imperialism 16 

Position on L.A. Mayor's Wish to 

Blame Pollution on Dairies 17 

Questions by SENATOR PETRIS re: 

Former Statement that AQMD was Number 

One Killer of Business in California 17 

Pollution vs. Regulation 18 

Ability of District to Clean Up the Air 
Pollution in Foreseeable Future 20 

Numerous Daily Violations of Air 

Quality Standards in AQMD 20 

Reports of Companies Leaving California 

Due to Air Pollution Regulations 21 

Impact of Air Pollution on Health 23 

District's Study on Efficacy of 

Air Pollution Control Regulations 24 

Cal State Fullerton Study 25 

Representation of Building Industry 

Association 27 

Possible Conflicts of Interest 27 

Witnesses in Opposition: 

JOHN WHITE 

Sierra Club 28 

Questions by SENATOR LEWIS re: 

Charge of Lack of Balance 

on Board 29 



VI 



MARK ABRAMOWITZ, President 

Community Environmental Services 32 

Questions by SENATOR AYALA re: 

Category for Appointment to AQMD 35 

Questions by SENATOR LEWIS re: 

Conflicts of Interest 36 

Need for FPPC Investigation into 
Conflicts of Interest 37 

Statements by CHAIRMAN LOCKYER re: 

Implied Endorsements by Democrats 38 

Media Personalities 38 

No Accusations of Interest Conflicts 38 

Questions by CHAIRMAN LOCKYER re: 

Number of Businesses Represented by 

Nominee ' s Law Firm 39 

Conflict in Moral or Philosophical Sense 40 

GARY PATTON, General Counsel 

Planning and Conservation League 42 

Questions by CHAIRMAN LOCKYER re: 

Responsibility in 0MB 43 

JOHN McCAULL, California Legislative Director 

National Audubon Society 43 

Questions by CHAIRMAN LOCKYER re: 

Criticism of Rule Making on Stationary 

Sources that Would Constrain Business 

Activity 45 

Mobile Source Pollution 45 

Social Engineering 46 

Need for Local Board to Adopt 

Regulatory Orders 47 

Position on Senator Lewis' Current Bill 

Which Reverse Most Recent Rule 48 



Vll 



Lewis Bill that Would Have Board Members 
Directly Elected rather than Appointed 49 

Statements by SENATOR LEWIS re: 

Alternative Strategies 50 

Notion to Confirm . 51 

Statement of Intent by CHAIRMAN LOCKYER 51 

Committee Action 53 

Motion for Nomination to Go to Floor 

without Recommendation 53 

Committee Action 54 

ANN M. VENEMAN, Secretary 

Department of Food and Agriculture 54 

Background and Experience 55 

Questions by CHAIRMAN LOCKYER re: 

Water Contamination from Nitrates 57 

Questions by SENATOR AYALA re: 

Malathion Spraying and the Med Fly 58 

Problem with Spraying Residential Areas 

for Med Fly Eradication to Save Farmers 60 

Motion to Confirm 61 

Committee Action 62 

PETER G. STAMISON, Director 

Department of General Services 62 

Background and Experience 62 

Witnesses in Opposition: 

ALLEN AMARO 

Disabled Veterans Business Enterprise Network 65 

Response by MR. STAMISON 68 

Questions by CHAIRMAN LOCKYER re: 

Procurement Differences in Other States 69 

Response by MR. AMARO 71 



Vlll 



Questions by SENATOR AYALA re: 

Identical Letters in Opposition 72 

PAUL GUERRERO 

United Minority Business Entrepreneurs 

of California and Northern California 

Latin Business Association 72 

Questions by SENATOR BEVERLY re: 

Lowest Responsible Bidder Concept 75 

Response by MR. STAMISON 75 

Response by MR. GUERRERO 76 

Response by STEVE OLSEN, Chief Deputy 
Department of General Services 76 

Questions by CHAIRMAN LOCKYER re: 

Change in Procurement Policy 77 

Response by MR. OLSEN 77 

Response by MR. STAMISON 78 

Response by MR. GUERRERO 79 

Statements by CHAIRMAN LOCKYER re: 

Concern about Elimination of Goals and 

Office on Women and Minority Participation .... 80 

Tempted to Vote No to Send Message 

to Governor 80 

DONALD PARKS, President/CEO 

Information Services, and Applied Technology, Inc. ... 81 

Statements by CHAIRMAN LOCKYER re: 

Policies Prior to New Director 83 

ALLEN DAVENPORT 

Service Employees International Union 84 

Response by MR. STAMISON 87 

Statements by CHAIRMAN LOCKYER re: 

Appropriate Terms in Future 

Relationships under Disputed 

Contract 88 



IX 



Witness in Support; 

EPPIE JOHNSON, Chairman 

Eppie's Restaurants, and Director 

California State Insurance Compensation Fund 88 

Questions by CHAIRMAN LOCKYER re: 

Privatization of State Fund 91 

Statement of Intent by CHAIRMAN LOCKYER to Hold 
Confirmation Over to Later Date 92 

Termination of Proceedings 92 

Certificate of Reporter 93 



P-R-O-C-E-E-D-I-N-G-S 
— 00O00 — 

CHAIRMAN LOCKYER: Confirmations, first is Mr. Conlon. 
Good afternoon, sir. 

MR. CONLON: Good afternoon. 

CHAIRMAN LOCKYER: Senator Kopp, do you want to begin? 

SENATOR KOPP: Yes. 

Mr. Chairman and Members of the Committee/ I appear to 
present Mr. Conlon to the Committee for recommended confirmation 
as a member of the California Transportation Commission. 

I've known him since he was appointed to the Public 
Utilities Commission. I have been engaged in activity with him 
since he has been appointed a member of the California 
Transportation Commission. 

He has practiced as a certified public accountant with 
Arthur Andersen for approximately 30 years with honor and with 
rectitude. He is the only certified public accountant on the 
Commission, which is an advantage, in my strong opinion, because 
so much of the work of CTC involves rather complicated 
transportation financing and transportation financial 
allocations between the various branches of government and 
levels of government in California. 

He's acutely and keenly interested in the work of the 
Commission. 

As you know, the Commission has been serving, or the 
members have been serving during a particularly difficult time 
in the last couple of years in which the expectations of the 
Transportation Blueprint in 1989 did not mature, did not 



1 eventuate. Difficult decisions have been compelled/ and Mr. 

2 Conlon has applied himself directly in what I guess popularly 

3 today is known as a hands-on method of ascertaining and 

4 identifying issues and making decisions thereon. 

5 I recommend him without reservation to you, 

6 Mr. Chairman. 

CHAIRMAN LOCKYER: Did you notice any particular one 

8 that you thought was changed or implemented as a consequence of 

9 his hands-on involvement? 

10 SENATOR KOPP: I think that he has been a sturdy 

11 exponent of transit, and the place of public transit in 

12 California's transportation structure. He's been singular in 

13 that respect, certainly. 

14 We had the pleasure of each other's company a couple 

15 weeks ago involving inspection of state and county highway 

16 facilities on the Mexican border. That doesn't involve public 

17 transit, but I can certainly represent to the Committee that he 

18 is conscientiously interested in fostering public transit. 

19 Thank you. 

20 CHAIRMAN LOCKYER: Thank you, Senator. 

21 Commissioner, do you want to comment at all in any way? 

22 Do you have an opening statement? 

23 MR. CONLON: I have an opening statement, but I think, 

24 maybe in the interest of time, maybe I could pass it out to you 

25 and just summarize it very briefly, if you'd prefer. 
2 6 CHAIRMAN LOCKYER: Okay. 

27 MR. CONLON: I think that Senator has been gracious 

28 enough to cover most of my credentials. I think my 30-year 



career with Arthur Andersen as a CPA certainly should help both 
the Transportation Commission and has helped on the PUC. 

I'm certainly honored to be appointed to this position, 
and I believe that my experience will be very helpful at the 
CTC, and the interrelationship between PUC and the CTC. 

The PUC today has many responsibilities in regard to 
rail, which are also involved at the CTC. And I think that on 
our rail endeavors at the PUC, we get involved in the rate 
separations. We've gotten involved in North Coast railroad. 
We're involved in the Alameda rail corridor. 

One of the Commissioners, Dan Fessler, is on the High 
Speed Rail Commission. We're actively involved in representing 
the state in the Southern Pacific-Union Pacific merger. 

We have primary responsibility for the transit 
districts as far as safety is concerned. And as Senator 
mentioned on NAFTA, we're certainly working with the NAFTA 
Implementation Committee, and working with the related parties 
on insurance and safety of these trucks coming across the border 
when that begins in the near future. 

I think the other experience that I've had that may be 
germane from the public interest standpoint work is some of the 
work that I've done in the public sector as far as nonprofits 
are concerned. And as I indicated in the my bio, I worked with 
self-help for the elderly for ten years, which is a senior 
citizens agency in Chinatown that built a public housing project 
some years ago . 

I'm presently on the Industry Education Council, where 
we're continuing to try and help transition from high school to 



1 jobs, public education. And after my early retirement from 

2 Arthur Andersen, I spent almost two years with the Alameda 

3 Unified School Direct in helping them create their vision for 

4 education and their definition of the ideal graduate. 

5 I think those are three of the various things that I 

6 had done in the civic responsibility when I was with Arthur 

7 Andersen or immediately thereafter. 

8 I believe that my professional experience, my 

9 experience at the PUC, and my civic work that I've done 

10 certainly give me the qualifications to be a good Commissioner 

11 at the California Transportation Commission. 

12 So, I think that summarizes my comments, and I have 

13 Superintendent Dennis Chaconis here today if you'd like to spend 

14 a minute or two on the work that we did at the Alameda Unified 

15 School District. 

16 CHAIRMAN LOCKYER: Let me find out from Members, 

17 especially the Senator that represents Alameda, I had heard 

18 during a meeting last year with, I believe, it's Mr. Kelly from 

19 Arthur Andersen? 

20 MR. CONLON: Yes, Tom Kelly. 

21 CHAIRMAN LOCKYER: How enthusiastic the firm's 

22 commitment is to helping with Alameda's planning and program. 

23 So, I was pleased to hear about private sector involvements of 

24 that sort. 

25 I guess for you, it was once you retired. 

2 6 MR. CONLON: I was on a consulting arrangement for two 

27 years to work half-time with the city and the school district. 

28 CHAIRMAN LOCKYER: Are there questions? Let's get 



those first, Senator Petris. 

SENATOR PETRIS: The question I have is on serving in 
both capacities. 

CHAIRMAN LOCKYER: The law does that. 

SENATOR PETRIS: The law permits it or requires it? 

CHAIRMAN LOCKYER: Requires. 

SENATOR PETRIS: That answers my question. 

CHAIRMAN LOCKYER: That is, there is a member of the 
PUC who serves on the CTC. 

SENATOR BEVERLY: He's replacing Mr. Fessler. 

MR. CONLON: Yes, on the CTC. 

CHAIRMAN LOCKYER: Anything else Senator? Senator 
Ayala. 

SENATOR AYALA: Yes, Mr. Conlon, we just passed a $2 
million bond issue? Is it $2 million or $2 billion? 

MR. CONLON: Two billion. 

SENATOR AYALA: For the seismic retrofitting. 

We have a four-and-a-half billion dollar shortfall in 
STIP. 

Do you think we have sufficient funds now to at least 
keep up with the problems needed in our state highways, 
maintenance, so forth? 

MR. CONLON: That requires a lot of analysis, but 
certainly the state is much better off since that proposition 
has passed. I think the dire consequences of that proposition 
not passing would have been very bad for the state. 

I think now that it's passed, those funds will be 
available to do all the retrofitting on the nontoll bridges and 



1 certainly a significant portion of the toll bridges, so I think 

2 that the money will be well spent, and it should help us in our 

3 next STIP program, which will be in '98, probably not cut back 

4 like we had to do this year many of the projects in the state, 

5 or we will have to. We'll vote on that later this month. 

6 SENATOR AYALA: You prefer a bond issue to finance our 

7 highways as opposed to a sales tax on gasoline? 

8 MR. CONLON: Well — 

9 SENATOR AYALA: If so, why? 

10 MR. CONLON: I think the future issues of 

11 transportation in the state are very significant. Once we get 

12 the bridges taken care of, I think the highways still are behind 

13 on their rehabilitation, rehab. There's now about a third of 

14 the state's highways need to be rehabilitated. In our current 

15 STIP, we've accelerated the amount of money to that program, and 

16 as a result, at the end of this year, at the end of the current 

17 STIP program, we will have reduced the highways that are in 

18 disrepair from 15,000 miles down to 10,000 miles. 

19 So, I think we need to accelerate that program if we 

20 possibly can, and I think that any vehicle that the Legislature 

21 can work with the Governor's Office, can work with the Caltrans 

22 and work with us, to get the funds necessary to do that, we are 

23 supportive of. So, I don't think there's any one — 

24 SENATOR AYALA: You prefer the bond issue financing as 

25 opposed to sales tax. 

2 6 MR. CONLON: I think that really is a difficult issue 

27 for one commissioner to express. I think the Legislature and 

2 8 the Governor's Office has to make the first commitment as to 



where these funds should come from. And then, we can be 
supportive in allocating those funds and prioritize the projects 
that they go to. 

We were supportive of the bond issue. The CTC did pass 
a resolution supporting the legislation which enacted the bond 
issue. So, I do want do say that the Commission was supportive 
of the bond issue. 

SENATOR AYALA: The reason I'm asking is because the 
San Francisco earthquake problem we had there, we had a sales 
tax to repair those highways, and so forth, in San Francisco. 
Within two years, they were paid for, and the sales tax came 
off. 

A bond issue, we go 40 years to amortize it. People 
who' re not even born today will be paying for it. I know that 
Republicans hate the word tax, but we have to be a little bit 
concerned with the people that will paying for this bond issue 
don't even know where Northridge is, by the way, in case of the 
bond issue we just approved. 

So, I don't understand the reluctance on the part of 
people to put a tax, like we did in San Francisco, to get the 
job done. And it's off within three or four years, as opposed 
to 40 years of paying for a bond issue, where you pay twice as 
much as the bond issue's worth through interest. I don't 
understand that financing at all. 

MR. CONLON: I guess the fact that the voters passed it 
is very encouraging. I think that we at the Commission were not 
optimistic that the voters would want to step up and do that 
type of financing for the very reasons that you just mentioned. 



8 

1 So, the fact that they did it, I think, is encouraging both for 

2 the schools and the highways. So — 

3 SENATOR AYALA: But the voters had no choice. It's the 

4 only ballpark in town. 

5 MR. CONLON: Well, they could have rejected it. 

6 SENATOR AYALA: They didn't have, do you want a bond 
issue or sales tax, either that or none. They would have 

8 supported a sales tax as well, I think. 

9 MR. CONLON: Well, they turned it down in '90 and '92, 

10 and we were counting on -- I wasn't on the Commission, but my 

11 understanding is that the plan that was adopted in '89 

12 envisioned passing bond programs in '92 to '94, to get the full 

13 program implemented that was designed in '89, and we still don't 

14 have that accomplished. 

15 We do have the one, and we're grateful for the one. 

16 And I really don't think, Senator, that I can categorically say 

17 that one method is preferred. I think our needs are so great 

18 that all methods have to be considered. 

19 And I really think it's a tough decision for you and 

20 Governor's Office to make, work out in the budget, and then we 

21 at the Commission will decide which projects get chosen and what 

22 priorities. 

23 SENATOR AYALA: Thank you. 

24 CHAIRMAN LOCKYER: Obviously, there will be legislative 

25 and budget events that will affect what moneys are available for 

26 what kinds of projects. 

27 I guess one of the frustrations that someone should 
2 8 mention, and it maybe more germane to what you can do in an 



administrative leadership role at CTC, is that it makes it 
difficult for us when Caltrans generates a list of estimated 
costs associated with major projects, and then the reality turns 
out to be very different from that. 

So, for example, with respect to the toll bridge 
retrofit, the estimate was $650 million. Well, now we're told 
it's closer to $2 billion. It's hard to understand being more 
than 300 percent wrong in these estimates. 

And so, to the extent that you have an opportunity to 
involve yourselves in the staff work that's conducted of that 
sort — it's not legislative, really, or even the budget — it 
might be helpful to discipline their forecasting in that 
context. 

MR. CONLON: Well, I think our Ex-Chair, who is now the 
Under-Secretary over there, that's one of his strong objectives, 
I believe. So, I think that will get attention, and I'll 
certainly do everything in my four years to see that we can get 
better estimates that are more realistic up front. 

CHAIRMAN LOCKYER: Mr. Superintendent, I don't think 
it's necessary to have you come up now. Just hello. 

MR. CONLON: I'll leave it up to you, Senator. 

CHAIRMAN LOCKYER: I don't think you need to, but let 
me ask what the pleasure of the Committee may be. 

SENATOR AYALA: I'll move. 

CHAIRMAN LOCKYER: We have a motion by Senator Ayala. 
Call the roll. 

SECRETARY WEBB: Senator Ayala. 

SENATOR AYALA: Aye. 



10 

1 SECRETARY WEBB: Ayala Aye. Senator Lewis. 

2 SENATOR LEWIS: Aye. 

3 SECRETARY WEBB: Lewis Aye. Senator Petris. 

4 SENATOR PETRIS: Aye. 

5 SECRETARY WEBB: Petris Aye. Senator Beverly. 

6 SENATOR BEVERLY: Aye. 

SECRETARY WEBB: Beverly Aye. Senator Lockyer. 

8 CHAIRMAN LOCKYER: Aye. 

9 SECRETARY WEBB: Lockyer Aye. Five to zero. 

10 CHAIRMAN LOCKYER: Thank you. Keep up the good work. 

11 MR. CONLON: Thank you very much. Appreciate your 

12 support. 

13 CHAIRMAN LOCKYER: Mr. Hewitt is next, South Coast Air 

14 Quality Board. I need to excuse myself for about five minutes. 

15 SENATOR BEVERLY: Mr. Hewitt, do you have an opening 

16 statement or remarks you'd like to make? 

17 MR. HEWITT: Thank you, Senator. 

18 Just very briefly, I had hoped to be introduced today 

19 by Senator Hayden. Senator Hayden has been called away to San 

20 Francisco. 

21 Senator Hayden has become a friend of mine over the 

22 five or six years, as I have interviewed him on a half dozen 

23 occasions, and we've come to respect each other for our various 

24 intellectual positions, though we often do not agree on 

25 anything. We become alarmed, in fact, when we are increasingly 

26 agreeing. 

27 SENATOR BEVERLY: Let me clarify, Haynes or Hayden? 

28 MR. HEWITT: Hayden, yes, sir. I'm not surprised you 



11 



heard me wrong there. 

The reason I asked Tom to come was because we have 
developed for each other this respect for intellectual positions 
that are independently adopted and defended with a great deal of 
civility but yet passion. 

And that is what has marked my tenure on the Air 
Quality Management District, and in which I want to limit my 
remarks to one bill in particular. The only controversial bill, 
in fact, that has before — or rule that has come before the 
AQMD in my year on the Board, and that is 2202. 

Rule 2202 was adopted in December of last year over my 
opposition and the opposition of two other Board members because 
we saw in it a blatant attempt by the Board and the staff to 
overrule the will of this body. 

Senator Lewis and Senator Hurtt had both sponsored, and 
this Senate had passed, and the Assembly had agreed, and the 
Governor had signed, two pieces of legislation that had repealed 
ride sharing mandates. The Federal Congress had also moved in 
that direction, was on the eve of passing another similar 
repeal. 

At that point, I and the other two Board members 
believed it was simply improper for the AQMD to take the 
position that the will of the Senate and the will of the 
Assembly and the will of the Governor did not bind the AQMD, and 
to put together a rule, 2202, that had the effect of leaving 
ride sharing in place. 

It is for that reason there has been some controversy 
in the last year, but that was the only reason. I believe it is 



12 

1 probably one of those problems that attends the development of 

2 an agency, that, when it goes through an adolescent period — 

3 it's 20 years old -- that it begins to resent very much the 

4 governance of the body that brought it into being, in this 

5 instance, the Senate and the Legislature of California. 

6 That being said, and my only criticism of my year on 
the Board being that rule, I'd also like to compliment the staff 

8 there for being fine professionals in the area of science, and 

9 to recommend continued support for the district's efforts in the 

10 area where it is most productive, which is high research in the 

11 areas of technology. 

12 That having been said, my colleagues in the press are 

13 grumbling about the length of this hearing. God knows, we don't 

14 want to get them upset, so I'll leave it at that. 

15 SENATOR BEVERLY: Any questions from Members of the 

16 Committee? Senator Lewis. 

17 SENATOR LEWIS: Mr. Hewitt, first of all, I want to 

18 thank you for being one of the three members of the 

19 twelve-member board that defended the actions of the 

20 Legislature. 

21 I personally took a great offense that nine members of 

22 the twelve-member board ran rough-shod over my legislation and 

23 the will of the Legislature. My bill passed the Senate, I 

24 think, on a 28 to 8 vote, rather overwhelmingly. It was signed 
2 5 into law. 

2 6 I was wondering if you could, given the fact that these 

27 kind of ride sharing programs have proven to be so ineffective 

28 compared to other strategies to try to combat smog in the Basin, 



13 

or other parts of the state, why is it that nine members of the 
South Coast district would so willingly violate the intent of 
the law in pursuit of a strategy that's failed? 

MR. HEWITT: Well, Senator, I won't speak for what my 
colleagues did. They made some statements at the time. 

I will note that among the testimony received by the 
Board during that very prolonged controversy was the testimony 
of two groups. One, large businesses that had adopted a ride 
sharing program into their labor contracts, who argued that they 
would suffer a loss of esteem and ability to deal with their 
organized labor if, in fact, they were obliged to abandon ride 
sharing. 

That was pursuasive to a certain extent for some of our 
members, but it did not override our concern that, in fact, the 
Legislature had still taken this away from us. 

There is also a lobby of people who have organized 
themselves to benefit from the institution of ride sharing. 
These are the individuals who teach ride sharing, who promote 
ride sharing, and who have a little cottage industry built up 
about ride sharing. They're very upset about the fact that this 
Legislature had moved to take ride sharing away. 

That having been said, 2202 is not a bad rule. It's 
actually a pretty good rule, except for the inclusion of ride 
sharing in it. I would vote for it again, and hope to have been 
able to vote for it the first time, had it been limited to all 
of the other alternatives, except ride sharing. 

But it was clear to me that once the Senate and the 
Legislature said no ride sharing, that we ought to have 



14 

1 respected the will of this body, and to have done so fairly 

2 routinely. 

3 So, I won't put words in the mouths of my other nine 

4 colleagues, but it was not a decision that was hard for me. I 

5 am used to the idea that Legislatures legislate, and 

6 administrative agencies simply follow the rules they are given. 

SENATOR LEWIS: Sounds like you and I might have a 

8 fundamental disagreement on 2202, because that would put you on 

9 line of supporting a direct source regulation. 

10 MR. HEWITT: We do have some disagreement there, 

11 Senator. There are some abilities to support indirect sources 

12 to the extent that stationaries cannot account for the necessary 

13 inventory reduction that we need over the next four years. 

14 SENATOR LEWIS: Do you think it's right or justifiable 

15 that employers in the South Coast Basin that have no 

16 relationship to smog, other than the fact that some of their 

17 employees might drive to work, should be required to engage in 

18 these kind of programs? 

19 MR. HEWITT: Only to the extent that it prevents the 

20 EPA from imposing regulatory sanctions that are more serious 

21 and more onerous than those which are already in place. 

22 The EPA would not limit itself to employ sanctions. 

23 They would shoot for those same employers. 

24 So, I look for least of the evils, and 2202 could have 

25 some ways to keep down the evils, but ride sharing is not one of 

26 them. 

27 SENATOR LEWIS: So, whereas, I might take the approach 

28 of wanting to tell EPA to stick it, you might take a more 



15 

moderate and temperate approach? 

MR. HEWITT: Yes, Senator, but I'd also recapture the 
original point by saying, whatever this body and the Assembly 
told us to do is what I would implement. 

SENATOR BEVERLY: Any further questions by any Member 
of the Committee. Senator Ayala. 

SENATOR AYALA: Mr. Hewitt, I have a whole folder full 
of opposition, letters of opposition. We discussed one in my 
office. 

Did you ever get ahold of those folks? 

MR. HEWITT: Senator, I did call, and I had a very 
interesting reaction from the local AFL-CIO. They did not know 
who I was, which was very upsetting to me, since I'm on 
television five nights a week, and they're not watching PBS. 

I don't have any idea what that's about. I did try, 
Senator. 

SENATOR AYALA: Do you believe that the air pollution 
in Southern California, where a lot of us reside, is one of the 
worst polluted areas, air pollution problems, in the country, 
according to the Congress? Do you believe that? 

MR. HEWITT: Absolutely. If you combine the air 
pollution of the five next largest metropolitan districts, they 
would not equal that of the Los Angeles Basin. 

SENATOR AYALA: Again, basing my questions on the 
letters, and there are a multitude of reasons why they're 
opposing you. You said that Senator Hayden supports you? 

MR. HEWITT: Senator Hayden had agreed to introduce me, 
Senator Ayala. I do not know what he was going to say. Tom and 



16 

1 I get along. 

2 I have a lot of friends on the Democratic side. Bill 

3 Press is an old and good colleague of mine/ with whom I've 

4 debated these issues for years in good spirit. From the 

5 environmental community of Michael Bean, who's the Environmental 

6 Defense Fund. Joel Reynolds of the Natural Resources Defense 

7 Council. 

8 We don't often agree on anything, but we do so civilly, 

9 and with respect for each other's well thought out opinions. 

10 SENATOR AYALA: It confuses me, because the Chairman of 

11 your Board is from my area, and he says that legislation that 

12 you're supporting is state legislative imperialism because it's 

13 a direct attack on local governments. And this is your 

14 colleague on the Board, your Chairman. 

15 How do you respond to that? 

16 MR. HEWITT: Well, Jon and I have had a lot of 

17 conversations about 2202. If he and I were to think 

18 prospectively about bills, we might agree, Senator, about ones 

19 that are pending in the chamber. But once the chamber has 

20 passed, and the Assembly has agreed, and the Governor has 

21 signed, I depart from Chairman Mikels in this opinion. 

22 It is not Up to the AQMD's Board to disagree with what 

23 this group has done and the Governor has signed into law. 

24 It is our job to implement, because we do not make the 

25 laws of California. We're merely an administrative agency; 

26 we're birthed by this. 

27 If you tell us how high to jump, we jump. If you tell 

28 us to wear purple uniforms, we wear purple uniforms. And if you 



17 

tell us to abolish ride sharing, we ought to abolish ride 
sharing. 

SENATOR AYALA: I represent the dairy area, and the 
Mayor of Los Angeles wanted to transfer the responsibility over 
to the area that I represent, when 85 percent of the pollution 
is intrusion from the west. Orange and L.A. County. He refused 
to admit that. He thinks that the dairies are causing the 
problems, not so much as the automobiles in downtown Los 
Angeles. 

What is your position on that? 

MR. CONLON: Luckily, we have some scientific studies 
now, Senator. Where Mayor Riorden thought that between 30 and 
40 tons of ammonia a day was being emitted by the 300,000 heads 
of cattle in your district, in fact, it turns out to be about 7 
tons a day. 

Given the fact that dairy has been on a declining road, 
it would not be a priority of me if I continue on the Board. I 
think the cows are a rather benign influence when it comes to 
the air pollution problem. 

SENATOR AYALA: I don't have any more questions. 

SENATOR BEVERLY: Any further questions? Senator 
Petris. 

SENATOR PETRIS: You've been quoted back in August 
1992. I don't know whether that still pertains, but the 
quotation in the National Review that you said that the number 
one killer of business in California is the AQMD, which is so 
powerful as to have nearly dictatorial authority over four 
Southern California counties. 



18 

1 Is that your statement? 

2 MR. HEWITT: That is, in fact, my opinion, and it 

3 remains especially true now that we have to act with great 

4 caution, Senator. 

5 The change in workers compensation is one of the 

6 biggest obstacles to business in Southern California, but I 
served at the request of the district before I was appointed to 

8 it as a member of the Special Commission on Air Quality and the 

9 Economy. We received testimony from over 200 witnesses, and in 

10 1992, it was, in fact, the district that was killing jobs at a 

11 horrendous pace in the South Coast. 

12 SENATOR PETRIS: Was that through its regulations? 

13 MR. HEWITT: Yes, sir, and the inability to move as 

14 quickly as was necessary to allow business to survive the 

15 recession. 

16 It was a cumulative impact of many factors, but the 

17 district was being unresponsive at that time. It has since 

18 changed number of its most onerous provisions, including some 

19 due to the intervention of this body, and Senator Polanco's 

20 bill, and others. 

21 SENATOR PETRIS: Does that mean you don't feel that air 

22 pollution causes any business problems or extra expenses? 

23 Let me repeat it in a different way. I'm trying to get 

24 your position clear. 

25 I guess what you're saying is, it's better to let them 
2 6 go on polluting than to regulate them. 

27 MR. HEWITT: No, Senator. It is vitally important — 

28 it's expensive to do this. I'm sure you know. The AQMP has 



19 

estimated it'll cost five-and-a-half billion dollars over the 
next ten years, but the health benefits are estimated to be in 
excess of six billion dollars over the next ten years. 

It's just important that we not regulate without an eye 
on the bottom line and on business, or other areas. I'll give 
you one example. 

When 2202 passed in December, after I had lost the 
first vote with my two colleagues, I made a motion to bring it 
back for a question of whether or not we would exempt schools. 
Then it came back last month with amendments that I had put 
forward. 

And we had testimony from the Los Angeles Unified 
School District. And I asked their representative, how much has 
Rule 1500 cost you? And over the last four years, it has cost 
the Los Angeles Unified School District a half million dollars a 
year to comply with this rule. 

By virtue of my amendments, we were able to return to 
the Los Angeles Unified School District a half million dollars a 
year. Same air quality benefits, but just that we kept an eye 
on how we wrote our rules. 

That's what I bring to the district. I don't think it 
has to be a zero-sum game. You can have a healthy economy and 
clean air, but it takes particular attention and care in the 
drafting of the rules. 

SENATOR PETRIS: In how you do it. 

MR. HEWITT: Yes. 

SENATOR PETRIS: Do you think it's a health problem at 
the present time? 



20 

1 MR. HEWITT: Yes, it is. 

2 SENATOR PETRIS: Do you expect to see that clear up in 

3 the reasonable/ foreseeable future, or do you think that's 

4 something we're going to have live with for a long, long time? 

5 MR. HEWITT: We are on target by 2010 to hit the 

6 federal attainment goals. And I think if we hit federal 
attainment, we will have made significant progress in the South 

8 Coast/ but that depends on your timeframe. Fifteen years is 

9 still a long time. I have small children. I don't want them to 

10 breathe this stuff through the next 15 years, so we've got to 

11 keep making progress. 

12 SENATOR PETRIS: I'm told that in the South Coast 

13 Basin, one or more health-based air quality standards are 

14 violated over 200 days out of every year. 

15 MR. HEWITT: Cumulative, yes. Some of those occur on 

16 the same day. 

17 For example, VOCs, NOx and SOx might all be violated on 

18 one day, so that 200 days out of the year, we're not out of 

19 attainment, but if you added up the number of standards that we 

20 violated, you would have 200 different violations, yes. 

21 Did I make myself clear with that? 

22 SENATOR PETRIS: No, not for me. 

23 MR. HEWITT: We have a lot of different pollutants that 

24 we have goals to meet, volatile organics, nitrous oxide, 

25 particulate matters. And we might violate all of those goals on 

26 any given day, so we might get four tickets on one day. So, we 

27 might have unhealthy air 50 days a year, which would lead to 200 

28 violations. 



21 

I do want to compliment the district, though, in one 
respect. The number of days on which those violations occurred 
have dropped precipitously over the last ten years. The effect 
of the regulatory environment has worked in a number of areas. 
Didn't work with ride sharing, but it worked with some of our 
stationary sources controls. So, we've made significant 
progress, but we still have too many nonattainment days. 

SENATOR PETRIS: There was a lot of publicity a few 
years ago, maybe a couple years ago, about companies leaving the 
Basin because of air pollution regulations. 

Now, we often get those reports, and sometimes when I 
track them down, I find that's not the reason why they left at 
all. I remember one case in particular. The headquarters of 
the company was in Tennessee, and they had made a decision at 
the national level to pull in units from all over the country 
and kind of centralize and consolidate. 

But the public statement issued by the local manager in 
California attributed the move to totally unrelated things. It 
wasn't air pollution in that case; it was something else. 

Now, so that's why I'm asking. The spotlight was 
focused on a lot of companies leaving at a particular period of 
time. I don't know if you'd have anyway of knowing that, or 
whether you were on the Board at the time, but can you comment 
on that? 

MR. HEWITT: Yes. I was on the Special Commission on 
Air Quality and the Economy at the heighth of the recession. And 
we received a lot of testimony from people in whom the decision 
to relocate, air quality control regulations had been a factor. 



22 

1 They would not go so far as to say it drove them out, because 

2 workers' compensation would have also not been enacted at the 

3 time, so they cited it as factor. 

4 Only in two discreet areas did I find that it 

5 repetitiously killed jobs. One was in the furniture and wood 

6 coatings industry area, where we really do have the toughest 
rules on the block, and it makes it very difficult. And most of 

8 that has moved to maquiladoras and out of state. 

9 The second area where it is of sufficient — is in dry 

10 cleaning. Some people simply cannot afford the new equipment 

11 and the changeover, and some firms did collapse as a result. 

12 I hesitate, there are no hard and firm numbers to go 

13 with. It is an across the board kind of situation, but it does 

14 serve as a factor in decisions to relocate by a number of 

15 industries. 

16 SENATOR PETRIS: I've always been suspicious of those 

17 announcements. I've seen it in my own district. A whole 

18 General Electric plant closed down, moved out, and they made a 

19 big public to do. Then we found out that their move had nothing 

20 to do with the reasons they gave publicly. They're just 

21 settling the score with certain local council members and maybe 

22 planning commission members, what ever it happened to be. 

23 Now, I was asked in this particular period when 

24 companies seemed to be moving out, a lot of them went to Texas. 

25 And I was asked to comment on it, and what am I doing about 
2 6 trying to keep them in California. 

27 My question was, well, what's the price of keeping them 

28 here? I understand the reason they left is because they don't 



23 

like the air pollution control regulations. I've done some work 
in this field in legislation, and I found conditions were very, 
very bad. This was way back in the '60s, probably when you were 
in grammar school, or even before. 

But anyway, I found that, for example, a study done at 
the county level by some health people that checked out the most 
polluted areas of the Los Angeles basin. They couldn't find one 
child — and they checked a lot of them through the schools — 
they couldn't find one child, age 12, who had lived in the Basin 
his or her entire life up to then without measureable, objective 
evidence of lung damage, attributable to the normal sources of 
air pollution, automobile and stationary. 

That kind of shook me up, you know. I've had meetings 
with medical people on that. In fact, the study was done, as I 
recall, by the Medical Association. I think it was assisted to 
some extent by the statewide, but it was a local Medical 
Association that become so alarmed that they went into it. 

So, that's why I'm concerned about what's the current 
level, and how much is it impacting on the health of the people 
in the area, to the extent that we know? 

MR. HEWITT: Senator, if I can comment on that, Gladys 
Mate, who's the principal spokesperson for the Lung Association, 
first person I met with when I was named to the Board, we 
agree. There's no question about it, that air pollution can 
kill people, and it can certainly exacerbate asthma. It can do 
a lot of dilitorious health effects. 

So, the district has a role, and it's important that it 
do that role, and do that role well. 



24 

1 It's also important, though, because that role is 

2 expensive, in my view, that it not legislate in areas that 

3 either have been marked off by legislative decision, or that do 

4 not advance the goal of clean air, for a couple of reasons. 

5 One, it flies in the face of our basic 

6 executive-legislative framework. But more importantly, it saps 
energy and credibility from the agency when it must make hard 

8 decisions in areas that are expensive but yet return real air 

9 quality benefits. 

10 As I said earlier, the only area of controversy I've 

11 had in a year, and we've done a half dozen major rules, and 35 

12 different amendments, has been the attempt to repeal a rule that 

13 did not clean the air, which was Rule 2202, which is ride 

14 sharing. It did not have the effect that it was proposed to do 

15 good. And a good agency will retreat from a bad rule so that it 

16 will not drain credibility from its good rules and its effective 

17 rules, the rules which you and I would probably agree are 

18 necessary to advance the shared goal of clean air. 

19 SENATOR PETRIS: How was that established? Did they do 

20 a study during the whole period when that was in effect? 

21 MR. HEWITT: Yes, we did. In fact, we did a number of 

22 outside industry studies that showed that the cost per pound of 

23 improvement by taking it out of the air far over — was far too 

24 expensive to continue on that path. That it was much better to 

25 invest that money in other control measures. 

2 6 SENATOR PETRIS: Do you know the study that Cal State 

27 Fullerton did? 

28 MR. HEWITT: Yes, I am aware of it. In fact, I've 



25 

interviewed authors of it on the air. 

SENATOR PETRIS: As I understand it, they couldn't find 
any measureable negative impact/ and they reached — I'll quote 
it. That's why I'm reading it. They reached the following 
conclusion in their summary, quote: "There is little reliable 
quantitative data which supports the conclusion that heavy costs 
are imposed on the economy by air quality regulations, " close 
quote. 

MR. HEWITT: The Cal State Fullerton study, I believe, 
concludes its data collection in August of 1990, Senator, which 
is prior to the onset of the deepest trough of the recession. 

Even the proponents of that study, I believe, would 
admit that it does not speak to the cumulative effects of 
recession and air quality control. And that if they extend that 
study out and additional five years, I believe they will have 
radically different results. 

SENATOR PETRIS: Do they intend to do that, as far as 
you know? 

MR. HEWITT: I do not know. I assume — it's a good 
university program, so I assume they'll be updating it, but 
there is a lag in the data that is considerable for this sort of 
stuff. 

SENATOR PETRIS: They also said they did not find that 
air quality regulations created significantly higher costs for 
California industries compared to those in other states. 

I guess you read the whole report. 

MR. HEWITT: I read the whole report. There are some 
areas where I agree with them on that. The mobile refineries, 



26 

1 the refineries are actually going to make money as a result of 

2 this because we've obliged them to develop the technology in the 

3 reformulated gasoline that will corner the market. 

4 On the other hand, in the areas such as I've mentioned, 
furniture, dry cleaning, the costs have been enormous, and those 

6 individual businesses had to flee, or close, or move out of the 

7 Basin, or just go out of business. 

8 So, it's an irregular effect, the cumulative total of 

9 which comports with their conclusion, but on a case by case 

10 basis, the district's regulations have had very significant 

11 impacts sometimes. 

12 SENATOR PETRIS: Well, the conventional wisdom of the 

13 critics is that that's what drove a lot of businesses out, 

14 over-regulation and so forth. But other studies show that they 

15 were driven out -- they left when the defense spending went down 

16 the tubes by much greater numbers. 

17 Is that correct? 

18 MR. HEWITT: It's impossible ~ I don't think 

19 generalizations as to why businesses left California work, 

20 because defense build down is obviously — that's 88,000 jobs in 

21 three years, my understanding, direct jobs. 

22 At the same time, the district does take its toll. 
2 3 I've mentioned a couple of industry segments where it hurt. 

24 But the generalizations as to why California had a bad 

25 patch simply don't hold up from whichever person's agenda is 

26 being served by it. There are lots of reasons. The district 

27 has occasionally served in some industry segments to drive 

28 business away. 



27 

SENATOR PETRIS: Do you still represent the Building 
Industry Association? 

MR. HEWITT: No, I don't. 

SENATOR PETRIS: When you did you stop? 

MR. HEWITT: 1991. I do represent a number of land 
owners, a number of builders, but not the BIA itself. 

SENATOR PETRIS: That's on a smaller scale. 

MR. HEWITT: There are — some are quite large 
projects. We represent Lockheed Corporation. They're large land 
owners . 

SENATOR PETRIS: Large in other ways, too. 

MR. HEWITT: Yes. 

SENATOR PETRIS: Well, the question is the same, 
regardless of the scope. 

That is, isn't there a conflict between representing 
those who obviously need to expand, and acquire more land, and 
build on it, and manufacture on it, and so forth, versus the air 
pollution restraints, which are going in the opposite direction. 
Maybe not prevent them from building, but to put in tight 
regulations and make sure that their activities are not harmful 
to the public. 

MR. HEWITT: No, Senator. I served as Assistant 
Counsel in the Reagan White House, and I learned the conflict 
rules up and down because we did not want our nominees to get 
into trouble. And I've been very careful to seek the advice — 

SENATOR PETRIS: Which White House was that? 

MR. HEWITT: Reagan White House, 1984, '85. It 
happened after I left, Senator. 



28 

1 SENATOR PETRIS: Mr. Chairman, I'll refrain from any 

2 conflict on the Reagan conflicts. It would take me too long to 

3 enumerate them. 

4 MR. HEWITT: But I've gone to the — great lengths of 

5 requesting, for the first time in the history of the Board, an 

6 opinion from counsel on all of my law firm's clients on every 
matter coming before the Board because I am aware that even the 

8 appearance of impropriety can follow you for your entire career, 

9 and I will not allow that to happen. 

10 SENATOR PETRIS: Okay. Thank you, Mr. Chairman. 

11 CHAIRMAN LOCKYER: Were there other questions from 

12 Members, or may we take comment from interested citizens. 

13 Are there people present who would wish to support 

14 confirmation? Any supporters at this time. 

15 Are there opponents or those who would express concerns 

16 who wish to comment at all? Please come forward. 

17 MR. WHITE: Mr. Chairman, Members, John White 

18 representing the Sierra Club. 

19 We are opposed to Mr. Hewitt's confirmation on the 

20 grounds of lack of balance in both temperament and his 

21 approach. 

22 I have to commend the Committee for getting more 

23 elicitation of support for the public health mission of the 

24 agency today than we've heard in the whole time of his presence 

25 on the Board. But I think it's really a question of having an 

26 advocate for a single point of view, versus someone that's 

27 trying to represent the broader public interest. 

28 Mr. Hewitt is a skilled and knowledgeable advocate, 



29 

although I would reference his earlier comment about the number 
of violations does relate to the ozone standard. I think that 
number is probably 150 violations a year, but they are not 
aggregated, and there is no standard for volatile organic 
compounds. It's the constituent that makes ozone. 

We think that the AQMD has fallen too far in the other 
direction. The Board as a whole has moved aggressively in 
response to one segment of the community's interest, and we 
think that the representatives from the Governor need to reflect 
a broader point of view. 

We find him an engaging individual, and his television 
program is widely watched in the region. But for purposes of 
this position, we'd like to see the Governor do better. 

Thank you. 

SENATOR LEWIS: Mr. White, you started off by saying 
that he lacks balance, he has a lack of balance? 

MR. WHITE: Generally, yes. We've found that — 

SENATOR LEWIS: My question. 

MR. WHITE: — he's fairly one sided. 

SENATOR LEWIS: My question is, referring to the lack 
of balance, how about a board that, on a nine-to-three vote, 
votes to override the will of the Legislature when — 

MR. WHITE: Well, I would dispute that 
characterization, Senator. 

SENATOR LEWIS: — when you're one of the three in the 
minority, how much of a dominant vote do you want? Do you 
want it to be 10-2, 11-1, 12 to nothing? What kind of balance 
are you seeking? 



30 

1 MR. WHITE: That isn't what I'm — first of all, this 

2 is a vote to establish an alternative program that would allow 

3 -- let's understand what the facts are. What we're talking 

4 about is whether or not employers should be given the option of 

5 off-setting the employer -- employee trips with measures other 

6 than ride sharing, okay. 

He wants to have there be no opportunity to require 

8 ride sharing. What the proposal was is to give employers the 

9 option of meeting the burden in a variety of ways. 

10 I think the main problem with the proposal is, it's two 

11 years too late. I think it would have probably solved the 

12 problem had it been put in place earlier. 

13 But I'm talking representing more than the interest of 

14 the economic impact of those regulated by the agency. We'd like 

15 to see some consideration, such as the Committee began to elicit 

16 today, for the other part of the mission, which is protecting 

17 public health, which is looking at the long-term benefits of air 

18 pollution control, and not only the impact on the regulated 

19 community. And it's that single-minded focus on only looking at 

20 the impact on the regulated community that we object to. 

21 SENATOR LEWIS: Well, Mr. White, this Legislature came 

22 to the conclusion, and I authored the bill, that mandatory ride 

23 sharing programs as incorporated in rules like Regulation 15, 

24 were not cost effective and did not work. And to the extent 

25 that the district tries to enforce a program like that, as 

2 6 Mr. Hewitt eloquently stated a little while ago, I think the 

27 public starts to — 

28 MR. WHITE: Senator, if it was such open and shut case, 



31 

then, you wouldn't need another bill this year to correct the 
situation. If in fact the law says they can't do it, they can't 
do it. I think there's a question about that. 

I think what we ought to do, instead of having an 
atmosphere of blame and argument, we ought to see if we could 
get on with the business of more cost effectively regulating 
indirect and other mobile sources. We just heard about all the 
regulations on stationary sources that we don't want to have for 
people leaving the economy. That leaves mobile sources. 

In fact, I think, the option of providing employers 
with flexibility in meeting an obligation is a good 
development. And I think if your bill is written such that, in 
fact, if the action they took is prescribed, you don't need 
another bill. So, it ought to be in court. 

I think this is going to be joined in other forums. 

I don't dispute vigorous debate on this issue. What 
we're looking is for representative of the Governor to reflect 
more than the interest of the regulated community, and that's 
what we haven't seen, although the discussion today has been 
helpful in that regard, and I encourage you to keep up with it. 

SENATOR LEWIS: Clearly, what you want is a rubberstamp 
Board. 

MR. WHITE: No, I'd like to see some balance. I'd like 
to see some interest given to the health of the young people 
growing up in Los Angeles, some vision for technology, some 
vision for the future. 

You know, nobody goes before a body and wins all the 
time. I would say in recent times, the environmental community 



32 

1 has been losing consistently at the district. And Mr. Hewitt is 

2 certainly not a part of a minority in that sense. In that 

3 sense, it's a broad shift that's occurred. Those of you that 

4 have that point of view should be happy with the district. 

5 We're looking for something a little more than one 

6 single, narrow point of view on this position. 

7 CHAIRMAN LOCKYER: Okay, had you concluded? 

8 MR. WHITE: Yes. 

9 CHAIRMAN LOCKYER: Next comment. 

10 MR. ABRAMOWITZ: Thank you, Mr. Chairman, Members of 

11 the Committee. My name is Mark Abramowitz. I'm President of 

12 Community Environmental Services in Yorba Linda. 

13 For 15 years I've worked on air quality issues, and 

14 I've also served as former Chairman of the Hearing Board, 

15 Variance Hearing Board of the South Coast Air Quality Management 

16 District. My job was to grant regulatory variances. 

17 Currently, I provide services to major corporations, 

18 trade organizations and community groups. 

19 I've sent a very strong letter to the Committee 

20 already. I'm not going to repeat that information here. 

21 I don't believe that Mr. Hewitt possesses the 

22 qualifications, temperament, nor the integrity needed for the 

23 Air Board position. He flunked Senator Petris' quiz that he 

24 gave him, and I'll get to that in a minute. 

25 In the past, the Governor has appointed some excellent 
2 6 and well-qualified people to the Air Quality boards, such as 

27 Mr. Hewitt's predecessor, Steve Albright, and CARB Chairman, 

28 Jon Dunlap. You don't have to agree with an appointee in his 



33 

point of view, but the appointee ought to be a qualified 
candidate. 

Mr. Hewitt, I believe, has a possible conflict of 
interest, and I know Senator Petris addressed that, so I won't 
go into that any more. 

He appears today to sound very good in terms of air 
quality. He talks very good talk, but the walk that he walks is 
not the same as you've heard him today. In fact, his rhetoric 
normally is just very different than what you've heard him say 
here. 

I don't believe, and I think much of the community does 
not believe, that he's concerned about air quality, that only he 
is seeking to satisfy some sort of anti-regulatory agenda. He's 
not knowledgeable about air pollution and its impacts. 

As Mr. White indicated, we don't have a standard for 
VOC. That was one of the examples you got. He was completely 
wrong about your example on cumulative versus not cumulative. 
He flunked Air Quality 101. I teach air quality. He doesn't 
have an understanding of the fundamental basics about air 
quality. 

I'd like to share with you some fundamental information 
that, perhaps, Mr. Hewitt does not seem to be aware of. Ozone 
levels, such as those frequently here in the South Coast — down 
in the South Coast Basin, can cause shortness of breath, pain 
and coughing, increased susceptibility to infection and lung 
damage. This occurs especially among children and other 
sensitive individuals. 

Committee Members, there are many days when my 



34 

1 four-and-a-half year old and others cannot play outdoors like 

2 kids should be, because they'd be subjected to temporary and 

3 permanent lung damage, lung damage which hits young, developing 

4 lungs. 

5 Even my son's pediatrician in Anaheim Hills has noticed 

6 that not only does my son get frequent upper respiratory 
infections, but that many others do in amounts greater than that 

8 found in normal populations elsewhere. This incidence is so 

9 high that my son's doctor keeps several machines available in 

10 his office so that patients can borrow these machines that can 

11 quickly deliver medication to young, wheezing lungs. 

12 A recent American Lung Association study showed that in 

13 my Orange County, meeting health standards for particulates 

14 would decrease children's restricted activity days on an annual 

15 basis by 185,102, or 5,698 occurrences of acute bronchitis in 

16 children. And Orange County is frequently cleaner than the rest 

17 of the Basin. 

18 Mr. Hewitt does not belong setting air quality policy, 

19 impacting my son, my son's friends, or anyone else. 

20 Let me close by pointing out one last irony. 

21 Mr. Hewitt doesn't believe in regulation by non-elected 

22 persons. In other words, he's opposed to doing the very thing, 

23 the very job that he is asking to be confirmed to. 

24 Mr. Hewitt, I don't believe, takes seriously the job of 

25 protecting public health, but if he is concerned, the joke will 

26 be on the rest of us. 

27 Thank you very much. 

28 SENATOR AYALA: Mr. Chairman. 



35 



CHAIRMAN LOCKYER: Yes. 

SENATOR AYALA: The gentleman brought out the point of 
qualifications, and I'm looking at the qualifications. Under 
the rules, the Governor appoints one of the 12 members. The 
appointment of the Governor has to be a physician who is trained 
and experienced in the health aspects of air pollution, an 
environmental engineer, a chemist, meteorologist, or a 
specialist in air pollution control. 

Mr. Hewitt, you're an attorney. 

MR. HEWITT: Yes, Senator. 

SENATOR AYALA: Where in these do you fit in, what 
category? 

MR. HEWITT: I believe the Governor appointed me 
because of my service on the Special Commission on Air Quality 
and the Economy, on which I was Vice Chair, and my service as 
Chair of the Rule 15 Regulatory Review Committee, both of which 
I undertook on a voluntary basis over the course of 
two-and-a-half years. Mr. Abramowitz, in fact, served on the 
Reg. 15 Committee with me. 

And on that basis, as well as my prior service as 
General Counsel and Deputy Director of a federal agency, which 
required confirmation by the United States Senate, he concluded 
that administrative law combined with that particular air 
quality gave me the background. 

I will readily admit, I am not a physicist. I am not as 
well schooled as Mr. Abramowitz, but I believe I'm very well 
qualified and have discharged my duties. 

SENATOR AYALA: You feel your background qualifies you 



36 

1 as a specialist in air pollution control? 

2 MR. HEWITT: Yes, sir, especially with regards to 

3 mobile sources and those which we dealt with on the special 

4 commissions on which I have served. 

5 SENATOR LEWIS: Mr. Abramowitz, I think I heard you to 

6 say that Mr. Hewitt had a conflict of interest? Would you 

7 specifically let us know what that conflict is? 

8 MR. ABRAMOWITZ: I think I said I was concerned about a 

9 possible conflict of interest. And I think, as Mr. Hewitt 

10 admitted, there is the issue of appearance of conflict or a real 

11 conflict. 

12 SENATOR LEWIS: I think what he said was that he was 

13 doing everything possible to make sure that there would not be 

14 any appearance of a conflict. 

15 MR. ABRAMOWITZ: Well, he does have clients which would 

16 be impacted by indirect source regulations, by other 

17 regulations, and any requirements, even as fundamental as the 

18 state implementation plan. 

19 SENATOR LEWIS: Why don't you give us a specific 

20 example of a client, an issue in which he has engaged in a 

21 conflict of interest. 

22 MR. ABRAMOWITZ: Well, I think if I recall, he just 

23 gave two examples of clients of his. I think he said one would 

24 be Lockheed. He also indicated other large land owners. 

25 Certainly to the extent that the Air District looks at 

26 indirect sources and looks at regulations, and where to put the 

27 kind of burden, that certainly impacts his client very 

28 specifically. 



37 

Lockheed also was subject to many different kinds of 
air quality controls, VOCs, which, although there's no standard 
for it, does result in ozone. Lockheed, I believe, is one of 
the larger emitters in the South Coast Basin. There is a 
concern about conflict. 

When I was on the Hearing Board, I recused myself even 
for an issue that happened ten years before, for something I 
didn't get paid for, and I didn't even remember the issue. 
That's the kind of care that you have to have. 

I can't think of very many things that Mr. Hewitt would 
be able to vote on, given the kind of appearance of conflict 
that there is. 

SENATOR LEWIS: Mr. Hewitt, should the FPPC or somebody 
else be investigating you right now for conflicts of interest? 

MR. HEWITT: Well, Senator, I don't mind being called 
stupid, but I don't like having my integrity called into 
question. 

That's why I asked Tom Hayden to come down and 
introduce me. That's why Bill Press would have been useful to 
receive a letter from. That's why Eric Mann from the Labor 
Community Strategy Center, one of the more vocal environmental 
groups, they might not agree with me, but I have never, ever had 
my integrity questioned, and I don't believe Mark intended to do 
that. 

I thought I heard some back pedaling there, and I 
appreciate that, Mark. 

CHAIRMAN LOCKYER: Well, I guess I would add, Senator 
Hayden could have been here and isn't, so I don't think it's 



38 

1 particularly fair to use his name as somehow an implied 

2 endorsement, or Bill Press, who could have been made an opinion 

3 known. 

4 I would note that what the three of you have in common/ 

5 and I think perhaps it's a defect for this particular job, is 

6 being media personalities. And as a general matter, I think 
probably media personalities are required, by the kind of 

8 communication they involve themselves in, to overstate and 

9 over-simplify, and make issues hot to be interesting to 

10 listeners. 

11 Those are exactly not the qualities we need in public 

12 service, where our tasks are to bring people together, to 

13 de-emphasize points of disagreement and emphasize areas of 

14 agreement. 

15 And so, I've often thought that Mr. Herscheson or 

16 Mr. Press, and I didn't know of your work, though I occasionally 

17 see the Bay Area feed of the program, enough that I have been 

18 able to evaluate your philosophy and ability to speak quickly, 

19 before most people's mind works. 

20 I make that point,, that I just think it's a discipline 

21 and a form of advocacy that is different than public service. 

22 With respect to the discussion of a conflict, I don't 

23 think anyone that I've heard, and I've read all the documents, I 

24 don't think anyone's accusing you of any personal omission or 

25 commission — 

26 MR. HEWITT: I appreciate that, Senator. 

27 CHAIRMAN LOCKYER: — that's violative of the law. 

28 Certainly, we have not heard anything like that. 



39 

The question I would have to raise, however, because 
I've got your SEI report that you're required to file as a 
public official, and we all are required to file these things, 
it looks like, if I've done my math correctly, in excess of 200 
businesses that your firm represents. I believe it's correct to 
call them all businesses; there may be a few exceptions, but 
where you're obligated to report because the firm receives more 
than $10,000 in income from each. I believe that's the 
rule. 

MR. HEWITT: No, Senator. I believe our $10,000 
clients — would that that were true, Senator. It's a much 
lower level. 

CHAIRMAN LOCKYER: Pardon me, there's a list of 10,000, 
where the pro rata share to yourself would be 10,000 or more. 

MR. HEWITT: It's a very small list, Senator. 

CHAIRMAN LOCKYER: Actually, that list is still pretty 
substantial, but mostly the types we've talked about: Peters 
Company, Kemper Real Estate, Lockheed, Sherman, 
McDonald-Douglass, Pardee Construction, Quick Silver, Rubie's 
Diner, Bell Jackpot Casino, Gateway Industries, Barrett 
American, Kajima Engineering, Lakeview Investments, Western 
Waste Industries, Tejon Ranch, and so on. 

But the other form — actually, I don't know what the 
trigger is. It doesn't say. 

MR. HEWITT: I think it's a hundred bucks. I think 
it's a hundred dollars. 

CHAIRMAN LOCKYER: I don't know. I guess I should know 
that. 



40 

1 It's obvious, many of these would be firms that — I 

2 don't think it's fair to make a law firm publicly disclose every 

3 client; that is, every amount paid by every client. So, that's 

4 part of the difficulty here, is that the law reflects that sense 

5 of fairness in not necessitating a disclosure, other than the 

6 fact that there's income from 200 different businesses. 

7 MR. HEWITT: That's true. 

8 CHAIRMAN LOCKYER: The question, then, isn't one of 

9 conflict in the technical or legal sense. It's more a matter of 

10 conflict in the sort of moral or philosophical sense. 

11 If you are a free market advocate, which seems to be 

12 your basic philosophy, if your income is largely derived from 

13 lawyering with, or at least the law practice income, I think 

14 that probably is most of it — Bill Press got a pretty good 

15 deal, I must say. I don't think that's true with yours. 

16 MR. HEWITT: Senator, can I interject one thing? To 

17 answer the conflict issue, I hate to beat my own — 

18 CHAIRMAN LOCKYER: The point is this, should we be 

19 concerned not about conflict, again, that somebody's accusing 

20 you of violating a law? That's the problem whenever we use that 

21 word. 

22 But the question is, is there a conflict in the sense 

23 of a philosophy that's inappropriate for balanced, fair public 

24 judgments on the board on which you sit? 

25 MR. HEWITT: And I don't think there is, or you'll end 
2 6 up enacting a standard that would prohibit lawyers from doing 

27 anything. 

28 As a means of illuminating this — 



41 

CHAIRMAN LOCKYER: A lot of people would agree with 
that. 

MR. HEWITT: That could be, but I like lawyers. I 
think lawyers tend to know what they're doing. I teach 
Constitutional Law, and we put it together to begin with. 

The FPPC has a rule that if you are paid to give a 
speech, even if you're nonpaid member of the board, you can't 
accept that. It's part of the media business that people will 
offer you outlandish amounts of money to speak, money which I 
have been directing to charity over the last year because, even 
though my general counsel tells me I have an argument to accept 
it, I don't want to run the risk. 

This Board has literally cost me tens of thousands of 
dollars to serve on because I believe that — Mark might not 
believe it — in the public health interest. 

We go to such great extent, Peter Greenwald and I, each 
month, to go through that list of clients and say, is there any 
way, and I have recused myself, perhaps, on a half dozen times: 
waste industries, landfill operator. Most recently, there was a 
remote rule that could have touched upon, though it wasn't going 
to, landfills. I recused myself. That's part of the business. 

If the government wants to have successful 
professionals with an ability to cover a lot of different 
grounds and to be in the law business, they have to accept that 
burden, and I accepted that burden. 

I do understand what you had to say about the media. I 
think it was Disraeli that said the majority is better than the 
best repartee, and when we're often in the minority, repartee is 



42 

1 all that we have, and I use repartee. 

2 But I do do this business seriously. I take my job 

3 seriously. 

4 One other last question, I didn't mean to imply Senator 

5 Hayden would have endorsed me. In fact, when I talked to Patty, 

6 his administrative assistant, I said, "By all means, have Tom 
tell them he won't vote for me. I just would like him to speak 

8 to our collegiality. " 

9 CHAIRMAN LOCKYER: It's clear from your presence today, 

10 you'd be a lot of fun to be collegial with. 

11 Next. 

12 MR. PATTON: Mr. Chairman and Members, Gary Patton, 

13 General Counsel of the Planning and Conservation League. 

14 We are here to oppose the nomination of Mr. Hewitt. We 

15 have submitted a letter. 

16 I apologize for not having been in the room for the 

17 entire time of this testimony. I've been in some other 

18 committees in your house and in the other house. 

19 I did check to see generally what sort of testimony had 

20 been forthcoming, and was able to listen to the last part of the 

21 dialogue in which you were involved, Mr. Chairman. 

22 I think that the issues I was most concerned of 

23 bringing to the Committee's attention, I think, have been raised 
2 4 and brought to your attention. 

25 We are a membership organization. We have about 10,000 

26 members individually, and a number, 250 or more, of 

27 organizations statewide. We do hear from time to time from our 

28 members on significant issues, and this appointment we consider 



43 

to be a significant issue. 

We have heard from members. They are concerned about 
the kind of conflict which does not charge the violation of the 
law specifically, but does go to the essence of being able to 
serve in an impartial, balanced way, in a body that is dealing 
with what I think is this state's largest, not only 
environmental problem, but economic problem, which is solving in 
the South Coast the problem of air pollution. 

And Mr. Hewitt, to our members, does not present 
himself as a person who can, in a balanced way, do a good job of 
that, and we suggest that you not confirm him, or recommend that 
he not be confirmed. 

Thank you very much. 

CHAIRMAN LOCKYER: Mr. Hewitt, when you were Deputy in 
OMB, what was the 6, 000 personnel agency you were responsible 
for overseeing? 

MR. HEWITT: The Office of Personnel Management employs 
6,000 individuals. It's a successor agency to the Civil Service 
Commission, which was implemented in 1978 with the Civil Service 
Reform Act. 

CHAIRMAN LOCKYER: So, in effect it was the federal 
civil service system? 

MR. HEWITT: Yes, sir. 

CHAIRMAN LOCKYER: Thank you. 

Yes, sir. 

MR. McCAULL: Thank you, Mr. Chairman and Members. My 
name is John McCaull, California Legislative Director for the 
National Audubon Society. 



44 

1 For similar reasons, our organization is opposing 

2 Mr. Hewitt's nomination. 

3 I have to say right up front that our organization does 

4 not frequently appear before the South Coast Air Quality Board, 

5 and I personally have not worked on issues before the Board. 

6 However, our organization frequently comes into contact 
with Mr. Hewitt on land use matters regarding some of his 

8 clientelle. And in the letter that I submitted to the 

9 Committee, as well as some attached documents, I tried to lay 

10 out at least some of the written statements that Mr. Hewitt has 

11 made in that realm. 

12 It may be somewhat of a stretch to say that because of 

13 our differences of opinion on how land use matters should be 

14 dealt with in Southern California, that we also would then 

15 therefore assume that Mr. Hewitt would not represent the state 

16 and the public well on the Air Quality Board; however, this does 

17 come down to a matter of philosophy. 

18 As you mentioned, we have a situation where the free 

19 market is clashing with the public trust in air, water, and 

20 wildlife, and we believe that Mr. Hewitt's record speaks for 

21 itself, and that we cannot support some of the positions he's 

22 taken regarding the public trust, and we have to oppose his 

23 nomination. 

24 I'd be happy to answer any questions. 

25 CHAIRMAN LOCKYER: Thank you. 

2 6 Anyone else that wishes to comment. 

27 Mr. Hewitt, it appears to me that when the Board was 

28 focused in on stationary sources, you were critical of rule 



45 

making that would constrain business activity with respect to 
those stationary sources. That is, organic compounds and other 
things that were emissions. 

MR. HEWITT: Among rules I've supported in that area 
are 1107, 1115, 460 ~ 

CHAIRMAN LOCKYER: Numbers don't mean anything. 

MR. HEWITT: I've been pretty active. 

The only rule on which I've had a split on the Board in 
this first year has been 2202, ride sharing. 

CHAIRMAN LOCKYER: So, then let me ask, if about 
three-fourths of all of the air pollution is attributable to 
mobile rather than stationary sources, what are we going to do 
about that. 

MR. HEWITT: You were out of the room, Senator. 
Senator Lewis a little expressed dismay with me because I'm in 
favor of indirect source regulation. 

What I am not in favor of is defying the will of the 
Legislature, which is what AQMD did in December of 1995. 

CHAIRMAN LOCKYER: I suggest to you that's disingenuous 
as an answer, and I don't think that's what motivated your 
position, and I'll bet I can find comments you made prior to the 
enactment of that bill that were critical of the policy. 

MR. HEWITT: I was very critical of ride sharing, but I 
wrote the 1501.1 Rule, which said, within the context of a ride 
sharing rule, what would you do? We came up with three 
alternatives. I liked those alternatives, one of them being the 
air quality investment program, because I think it promises much 
more return in air quality. 



r 

1 It's not disingenuous to this extent. I filed a 

2 statement with all of the members of the AQMD which said, 

3 whether or not you like ride sharing, we will have earned the 

4 contempt of the Legislature if we roll them. It is not our job 

5 to disagree with you. 

6 That was — that's heartfelt. That's absolutely 
heartfelt. That's as conservative a position as a conservative 

8 can get: Legislatures win over administrative agencies. 

9 CHAIRMAN LOCKYER: You probably are Frankfurter when 

10 you're teaching Constitutional law. 

11 MR. HEWITT: That is who I quote, Senator. 

12 CHAIRMAN LOCKYER: What are we going to do about the 75 

13 percent? 

14 MR. HEWITT: There's some good things to do. AQIP has 

15 raised about two million dollars in the first year of its 

16 operation. AQIP can buy old cars, which promises more of a bang 

17 for buck, and it has done that. 

18 I'm in favor of using it as well to develop additional 

19 programs that serve cross constituencies that training and 

20 repair of old vehicles that are also high polluters. 

21 There are ways to get at the mobile sources that do not 

22 compel the social engineering inherent in 1500. 

23 CHAIRMAN LOCKYER: The social engineering is just doing 

24 anything to restrict people's driving habits? 

25 MR. HEWITT: No, no. Social engineering is deeply 

26 intrusive attempts to use the employer, where we can tax — 

27 Senator Lewis and I disagree a little bit on this — there are 

28 indirect effects that intellectually to me, to go after the 



47 



employer. 

But when you start to use the employer to control the 
lives of the employee, beyond, perhaps, paying that fee that 
ought to be the concommitant expense of pollution, then you're 
asking the employer to serve as an extension of the state to 
control that person's individuality, which is something you 
might want to do as a Senator, because you'll be accountable to 
your constituencies, but to which an administrative agency, 
asking the employer to then control their employees for the 
benefit of the goal, strikes me as being four levels removed 
from where the accountability ought to run. 

CHAIRMAN LOCKYER: That's not an answer to the 
question. 

It might be better to do this on one of the programs. 

MR. HEWITT: You've stiffed us a couple of times. 

CHAIRMAN LOCKYER: But to just briefly join the issue, 
we have legislatively adopted federal and state guidelines or 
rules for clean air, and then delegated responsibility to figure 
out specific enforcement regimes with groups like the Air 
Quality Board. 

To suggest that somehow they're not as legitimate, I 
think, asks us to do something we can't do or probably shouldn't 
do. That is, the Legislature shouldn't try to adopt regulatory 
orders with the specificity that you find in the enactments of 
the Air Board. 

MR. HEWITT: I agree with that. The Legislative veto 
is really what I perceived in Senator Lewis' and Senator Hurtt's 
bill, which is, having delegated broadly to the agency, and the 



48 

1 agency taking from that a number of tools to use in its mission, 

2 it set upon one which, over a period of six years, proved to be 

3 ineffective and somewhat costly. Therefore, you repealed its 

4 efficacy. 

5 I saw the Assembly, and the Senate, and the Governor 

6 saying, do anything you want in this area, but don't use ride 
sharing. We don't like it, and we don't want it, and our Board 

8 contriving a way to get around the clear intent of the law. 

9 That's where the big controversy was about. 

10 CHAIRMAN LOCKYER: As someone who voted for the bill, 

11 unlike Senator Petris, I, at least defend the spirit of the 

12 legislation. I think there's a fair debate about whether it was 

13 a loophole, or an ambiguity, or whatever, that allowed for the 

14 continuation of the program. 

15 It seems to have been a problem that's been fixed in a 

16 substantial way by the rule making that you've done, and all 

17 parties seem to agree that that's been the final result, for 

18 which I compliment everybody, including yourself, for 

19 participating. 

20 SENATOR LEWIS: Not all parties, Mr. Chairman. 

21 CHAIRMAN LOCKYER: I guess maybe that's the next 

22 question I should ask. 

23 There are bills currently in progress, separate from 

24 this one. The current one by Senator Lewis would reverse the 

25 current, most recent rule. Am I correct about that? 

26 MR. HEWITT: Yes, sir. 

27 CHAIRMAN LOCKYER: Do you have a feeling about the 

28 bill? 



49 

MR. HEWITT: No. The AQMD has voted to oppose it. 

I have to explain that by saying I have a feeling about 
the bill. I understand Senator Lewis' anger, and I would 
support the bill if called to testify upon it, but the district 
doesn't have a position. 

My position about administrative agencies is that they 
ought not to lobby Legislatures. They do not have an 
independent consciousness, an independent existence. They ought 
to provide technical assistance, but that expenditures to lobby 
elected officials by administrative agencies seems to me to be 
an aberration from appropriate constitutional procedure. 

CHAIRMAN LOCKYER: So, the Governor shouldn't either? 

MR. HEWITT: The Governor is an equal branch to you, so 
I think he can. It is independent agencies that are not equal 
that I do not believe in lobbying. 

CHAIRMAN LOCKYER: The tens of thousands that work for 
him can then also? 

MR. HEWITT: Yes. 

CHAIRMAN LOCKYER: But you support the bill? 

MR. HEWITT: I would testify, yes, in support. 

CHAIRMAN LOCKYER: What about the Hurtt bill that would 
allow Orange County, for example, to withdraw? 

MR. HEWITT: Yes, sir. 

CHAIRMAN LOCKYER: Is there a Lewis bill that would 
have several members of the Board directly elected rather than 
appointed? 

MR. HEWITT: That's the most important one, in my 
opinion. 



50 

1 CHAIRMAN LOCKYER: Other questions from Members? 

2 Senator Lewis. 

3 SENATOR LEWIS: Just a couple quick comments. 

4 You were talking about possible alternative strategies, 

5 and two that weren't mentioned, one was with the advent of 

6 better and better technology in the remote sensing devices. 

7 Secondly, one of the failings of the ride sharing 

8 program, one of the reasons it hasn't worked, is because of the 

9 small universe of people when you're dealing with one particular 

10 company. That's why maybe a more aggressive program, like the 

11 older commuter computer program, something like that, where you 

12 have a much larger universe of people to draw from, those kind 

13 of programs make a lot more sense. 

14 MR. HEWITT: We've done more in one year to advance 

15 remote sensing, in that it's a technology-driving, 

16 employment-enhancing technology that is owned by Southern 

17 California companies, with the adoption of 1501 than had been 

18 done in the previous ten years. 

19 SENATOR LEWIS: It's kind of a misnomer to be talking 

20 about being opposed to ride sharing. We're not opposed to ride 

21 sharing, but the kind of trip reduction plans that have 

22 evolved. That's what we have found to be ineffective. 

23 CHAIRMAN LOCKYER: Well, there's a huge paperwork 

24 burden which seemed to me to be unproductive and unuseful in 

25 obtaining clean air goals. So, in that respect, I tend to 

26 agree. 

27 Although, I think ride sharing is ultimately what we'll 

28 have to figure out, or counties like Orange County won't have a 



51 

functioning transportation system. It barely functions now, and 
L.A, and the Bay Area, and so on. 

SENATOR LEWIS: Mr. Chairman, a little earlier in the 
day, I whispered to you that in Republican circles in Orange 
County, Hugh Hewitt is often referred to as being a more 
moderate Republican. You replied to me, and it got kind of a 
horse laugh from me, a little too loud in this committee room, 
that that probably spoke more about Orange County Republican 
Party, or the Orange County Republican scene rather than 
Mr. Hewitt. 

However, having said that, I think Mr. Hewitt has done 
an admirable job today of explaining very well his public health 
concerns, but also realizing the need for a certain amount of 
balance in terms of making sure that the regulations that are 
adopted by the AQMD are those that are the most cost effective 
as possible. 

And there is not a conflict between those two points of 
view, and I'd like to move his confirmation. 

CHAIRMAN LOCKYER: If you want to say anything in 
close, you can. There is no need to. 

MR. HEWITT: Senator, I'd like to thank the Committee 
for being very open, having a good conversation on the issues. 
I appreciate that consideration. 

CHAIRMAN LOCKYER: It is hard when you vote no on 
confirmations. It feels like it's too personal, that you're 
somehow rejecting the human being. 

I want to at least start by saying that that's not what 
I'm doing. I'm very impressed. It's obvious that you're bright 



52 

1 and well-educated, and, in addition, have added word smith 

2 skills to numerous skills that have helped you through the 

3 years, and now especially, in your mass communication goal. 

4 I'm concerned first that I think the Governor has 

5 displayed this general pattern of making political appointments, 

6 and then trying to figure out how it will fit the statutory 

7 requirement for certain kinds of expertise. 

8 While you obviously have learned and are a quick 

9 learner, and you've obviously learned something about air 

10 pollution control, I think it tortures the statute to describe 

11 you as an air pollution specialist, which is what's required of 

12 the law. 

13 That is a not a complaint I have about you. It's a 

14 problem I have with the appointing authority, and a pattern that 

15 I regularly see with this administration. 

16 My second concern is that I really think the TV 

17 advocacy role is too hot for deliberate public policy work, 

18 especially in a sensitive area such as air pollution regulatory 

19 work. And I haven't seen what I think is the appropriate policy 

20 balance. Just confined to your own thinking and philosophy, it 

21 may be your approach is a very needed one to correct and undo 

22 regulatory emphasis that we've seen with the Board in the past. 

23 I'd suggest, however, the right way to correct that is 

24 the way you've done, beat them up on the air, not try to do that 

25 and serve as a member of the Board at the same time. 
2 6 So, for those reasons, I am voting no. 

27 If anyone else want to add anything, I'm open to that, 

28 but we have a motion by Senator Lewis before us. 



53 



Call the roll. 

SECRETARY WEBB: Senator Ayala. 

SENATOR AYALA: No. 

SECRETARY WEBB: Ayala No. Senator Lewis. 

SENATOR LEWIS: Aye. 

SECRETARY WEBB: Lewis Aye. Senator Petris. 

SENATOR PETRIS: No. 

SECRETARY WEBB: Petris No. Senator Beverly. 

SENATOR BEVERLY: Aye. 

SECRETARY WEBB: Beverly Aye. Senator Lockyer. 

CHAIRMAN LOCKYER: No. 

SECRETARY WEBB: Lockyer No. Fails two to three. 

CHAIRMAN LOCKYER: It stays with us. 

SENATOR BEVERLY: I have a further motion, Mr. 
Chairman. I recommend nomination go to the Floor without 
recommendation of the Rules Committee. 

SENATOR LEWIS: Second that motion. 

CHAIRMAN LOCKYER: We don't need seconds here. 

Let's call the roll. This is a no recommendation 



motion. 



SECRETARY WEBB: Senator Ayala. 

SENATOR AYALA: No. 

SECRETARY WEBB: Ayala No. Senator Lewis. 

SENATOR LEWIS: Aye. 

SECRETARY WEBB: Lewis Aye. Senator Petris. 

SENATOR PETRIS: No. 

SECRETARY WEBB: Petris No. Senator Beverly. 

SENATOR BEVERLY: Aye. 



54 

1 SECRETARY WEBB: Beverly Aye. Senator Lockyer. 

2 CHAIRMAN LOCKYER: No. 

3 SECRETARY WEBB: Lockyer No. Fails two to three. 

4 CHAIRMAN LOCKYER: Other forums, Mr. Hewitt. We're 

5 going to at least let you take all those speaking fees now that 

6 you've had to give up. 

MR. HEWITT: Come to the show sometime. Senator. 

8 CHAIRMAN LOCKYER: Thank you. 

9 What's our next one? Mr. Stamison. It might be 

10 quicker if we did Veneman. Is there anyone here in opposition? 

11 Maybe we can move this along and you can get back to work. 

12 Opposition on Ms. Veneman. 

13 There is some. I Guess we'd better wait, then, I'm 

14 sorry. 

15 Is there opposition to Veneman present. 

16 Ann, come on up. We're going to try to speed this along 

17 a little, get you back to your job, over-regulating everybody. 

18 I think we have a glass of methyl bromide for your 

19 water glass here. 

2 MS. VENEMAN: Oh, thanks. 

21 CHAIRMAN LOCKYER: Go ahead. Did you have an opening 

22 statement at all. 

23 MS. VENEMAN: Yes. 

2 4 CHAIRMAN LOCKYER: Do you like this job? 

25 MS. VENEMAN: Some days. 

2 6 CHAIRMAN LOCKYER: One out of how many? 

27 MS. VENEMAN: Mr. Chairman and Members of the 

28 Committee, it's truly an honor for me to be here before this 



55 

Committee as the Governor's appointee as Secretary of the 
Department of Food and Agriculture. 

As most of you know, I had the privilege of working for 
the U.S. Department of Agriculture for almost seven years. And 
I really feel fortunate to have had that opportunity, because I 
believe it was an invaluable experience for the position that 
I'm now in. 

From 1991 until 1993, I was the Deputy Secretary of 
Agriculture, where I was responsible for overseeing the 
management of the U.S.D.A., its 42 agencies, and its more than 
62 billion dollar program budget. 

Prior to that appointment, I was the Deputy 
Undersecretary of International Affairs and Commodity Programs. 
In that capacity, I was responsible for all the international 
programs, including food aid, trade negotiations, and 
international market development. I was actively involved in 
trades negotiations, including US-Canada free trade agreement, 
the Uruguay round and bilateral disputes. 

While the decision to return to California to assume 
this position was not an easy one, I am happy to be back home. 
One of the things that I learned in Washington is that very few 
people around the country really understand the importance of 
agriculture to this great state. As I've traveled throughout 
the state in the past several months, I've seen first-hand the 
change that's occurring everyday in agriculture. 

California is, without question, the most sophisticated 
agriculture economy in this country and indeed the world. We 
are the nation's top producer, the top exporter, and the leader 



56 

1 in applying new technology and innovation to agriculture. 

2 In fact, agriculture has long been one of the 

3 strengths of California's economy. Nearly one in ten jobs is 

4 directly related to agriculture, and that number jumps to more 

5 than one in four in the Central Valley. 

6 With world population expected to double within the 
next 30 years, and 95 percent of that growth occurring outside 

8 the United States, we must continue working to prepare for the 

9 future and to maintain our state's competitive edge in the world 

10 marketplace. Opening new markets to California agricultural 

11 products will provide the single largest opportunity for 

12 agriculture to not only feed our country, but the rest of the 

13 world. 

14 In 1994 alone, agriculture products leaving California 

15 ports hit a record number: $11.8 billion, representing nearly 

16 15 percent of all U.S. agricultural exports. With every $1 

17 billion in exports, it's estimated that 27,000 jobs are created 

18 here in California. 

19 As we approach a new century, our agricultural 

20 industry, and the world in. which it must compete, are changing 

21 rapidly, and we must be prepared to adapt to that change and to 

22 maintain California's unique leadership role. Here in 

23 California, we have the tools to compete with anyone in the 

24 world. 

25 The Department is committed to serving the citizens of 

26 this state by promoting California agriculture and fostering 

27 public confidence in the marketplace through the development, 
2 8 implementation and communication of sound public policies and 



57 



prpgrams . 

I want to thank you, Mr. Chairman, for this opportunity 
and the Members of the Committee, and I'll be happy to respond 
to any of your questions. 

CHAIRMAN LOCKYER: I guess I'd like to ask about water 
contamination from nitrates or pesticides. Every month, there 
seems to be a new report of some sort that expresses concern. 
Metropolitan Water District estimated annual loss of four 
percent of their water supply due to nitrate exposure. It seems 
to be a growing and alarming problem. 

Is anything going on to address those issues? 

MS. VENEMAN: Well, as you know, Mr. Chairman, we don't 
have direct regulatory authority over those issues. 

We are, however, continually looking at new 
technologies, at integrated farming practices, and we have 
developed a policy unit within the Department to have input into 
all of these kinds of issues and programs so that we can assist 
with agriculture. 

We're also working very closely with many of the 
universities on these kinds of programs so that we can, as a 
Department, try to integrate with the regulatory agencies as 
well as the new technologies to help reduce the kinds of — any 
kinds of chemicals that are used on agriculture, and to make 
sure that we're the leader in adopting new technologies. 

CHAIRMAN LOCKYER: Let me ask if there are questions? 
Senator Ayala. 

SENATOR AYALA: While you were in my office about a 
month ago or so, we discussed the med fly situation, which 



58 

1 occurred in the '60s and then again not too long ago. 

2 In the '60s, they sprayed the agricultural area, 

3 because that's where it was, around San Jose, in that area. And 

4 at that time, they had malathion to spray the orchards, and 

5 another method to attract flies by some substance they would put 

6 in the tree. About 20 years later, we had infestation in the 
San Fernando area, in fact down where I live in San Bernardino 

8 County. At that time, all they had was malathion and that other 

9 substance. 

10 Are we going to improve on that? I inquire about that 

11 because they had a number of advertising on televisions that 

12 would say it was harmless, because they showed a little baby 

13 rolling over on the lawn as they were spraying. It was 

14 harmless. Would not be harmful to health. 

15 Now I see where I gave you an article where it said 

16 that the World Resources Institute had scientific studies of a 

17 number of these pesticides, and among them was malathion. It 

18 would be harmful and capable of damaging immune systems and 

19 increasing rates of infectious disease and cancer. That's 

20 malathion. 

21 If we have another infestation, do you plan to spray 

22 people with the malathion? 

23 MS. VENEMAN: Well, I think, Senator, when we discussed 

24 this in your office, I think we went over the fact that 

25 malathion has been used for control or for eradicating med flies 

26 in certain infested areas. 

27 But I think it's important to note a couple of things. 

28 One is that square mileage that has actually been treated with 



59 

malathion is very small compared to where we've be using 
alternative technologies. The area — the Corona area was only 
about 18 square miles, and the Camarillo area was about 16 
square miles. 

If you compare that to where we've been using the 
sterile release technology/ the sterile med flies as an 
alternative to spraying malathion, it's about 14 61 square 
miles. 

The Department, and obviously this predates my time 
there, has, I think, tried to use the malathion spraying to the 
minimum extent possible, but at the same time, we do have a 
responsibility to control these kinds of outbreaks. We are 
right now, we have completed our eradication program. We are 
going to continue a prevention program that includes sterile 
release of med flies, and as well, we are continuing to work 
with various agencies of the U.S. government, including the 
Agricultural Research Service, and other research organizations, 
to look for alternatives. In fact, one of the alternatives of 
methyl bromide will be tested starting this week. It's a 
nonchemical substance called Sure Die. 

So, we are looking continually at alternatives in 
helping to both support and fund some of the alternative 
research. 

SENATOR AYALA: So, you're saying that the spraying of 
malathion is okay in minute quantities? 

MS. VENEMAN: Well, malathion, according to the Health 
Department, does not produce a significant health risk to 
humans, according to the Health Department. 



60 

1 Since 1990, it's important to note that the dosage that 

2 we have used for malathion has actually been cut by 50 percent 

3 in these areas as well. So, I think it's working at it from 

4 both ends. 

5 SENATOR AYALA: I understand med flies are brought in 

6 by people themselves most of the time. 

But the last time that we had that problem, they were 

8 spraying residential areas, and not one drop in the inland 

9 valley, because they wanted to stop the med fly from getting 

10 over there where agriculture was. So, people were getting 

11 sprayed so that the farming community would benefit in the 

12 Central Valley. 

13 But I don't know that their produces were down low at 

14 the marketplace for those folks that suffered from the 

15 spraying. They were spraying to save the Central Valley from 

16 getting infested, and I supported that because agriculture is 

17 very important to California. 

18 But somehow or another, it doesn't seem fair to spray 

19 people in Southern Cal so that the farmers can be protected, and 

20 they don't sprayed. I have a problem with that. 

21 MS. VENEMAN: Well, as I said, we are continually 

22 looking at new technologies to avoid aerial spraying of 

23 malathion. 

24 I understand the concern in the residential areas, 

25 because I happened to be in Washington at the time that was 
2 6 going on and heard many of the same concerns. 

27 At the same time, I think it is very important to look 

28 at the significance of agriculture in this state, and look at 



61 

the reasons why it's those areas that are sprayed, because we 
normally find the outbreaks in the backyards of residential 
areas. That's normally where we have found the outbreaks in — 
at least the recent outbreaks that we've had. 

SENATOR AYALA: I can understand why they spray. 
That's where the flies were, but they avoided from getting 
involved in the Central Valley. But somehow or another, it 
doesn't feel right to spray people so that they can save an 
industry, which really, they have to pay the same price for more 
at the marketplace after they get sprayed. 

So, I don't know how you can correct that, but anyway, 
I thought I'd let you know that we were concerned about any 
further spraying in Southern Cal . 

MS. VENEMAN: I recognize that. I think many people 
are. 

CHAIRMAN LOCKYER: Any other questions from Members? 
Anyone in the audience that wishes to comment. 

I just would conclude by, perhaps, remarking that 
you're sort of vita is extraordinarily complete, balanced, 
you've done a lot of different things. It's a very interesting 
history. You've shown commitments to a variety of different 
public and private roles. It's good, very nice. 

MS. VENEMAN: Thank you. 

CHAIRMAN LOCKYER: Motion on this matter. 

SENATOR BEVERLY: Move we recommend confirmation. 

CHAIRMAN LOCKYER: All right, we have that motion made. 
Call the roll. 

SECRETARY WEBB: Senator Ayala. 



62 

1 SENATOR AYALA: Aye. 

2 SECRETARY WEBB: Ayala Aye. Senator Lewis. 

3 SENATOR LEWIS: Aye. 

4 SECRETARY WEBB: Lewis Aye. Senator Petris. 

5 SENATOR PETRIS: Aye. 

6 SECRETARY WEBB: Petris Aye. Senator Beverly. 

7 SENATOR BEVERLY: Aye. 

8 SECRETARY WEBB: Beverly Aye. Senator Lockyer. 

9 CHAIRMAN LOCKYER: Aye. 

10 SECRETARY WEBB: Lockyer Aye. Five to zero. 

11 CHAIRMAN LOCKYER: Thank you. 

12 MS. VENEMAN: Thank you, sir. 

13 CHAIRMAN LOCKYER: Next is Mr. Stamison, good 

14 afternoon. Do you want to start with any general statement at 

15 all, sir? 

16 MR. STAMISON: Yes, Mr. Chairman, I would like to make 

17 a few brief comments. 

18 Mr. Chairman and Members, thank you for the opportunity 

19 to address the Senate Rules Committee regarding the Department 

20 of General Services, and to answer any questions you may have of 

21 me . 

22 My name is Peter Stamison, and since being sworn in by 

23 Agency Secretary, Joanne Kozberg, on May 1st of last year, I've 

24 served as the proud Director of General Services and its nearly 

25 3700 employees. 

2 6 I'd like to briefly share my background with you. I've 

27 been in the private sector my entire formal working life prior 

28 to May Day of 1995. I worked as an executive for two highly 



63 

respected Fortune 500 companies. 

I began two entrepreneurial start-up ventures in 
telecommunications, both headquartered in Southern California, 
and was in the process of forming another private sector venture 
when I was called by an executive search firm about the 
administration's interest in having a business executive with my 
kind of background and track record run DGS . 

I was first skeptical that anything could be done to 
change the perceived unfriendly attitude California conveys 
towards its businesses and taxpayers. Secretary Kozberg 
convinced me otherwise. So, I accepted the challenge and began 
the work. 

DGS, as most of you probably know, consists of six 
operating divisions and 23 operating or support offices. 

Aside from Caltrans and CHP, we operate and manage the 
next largest fleet in state of over 5,000 vehicles. 

We are the landlord for the state, overseeing $300 
million a year in lease payments. We own the buildings for the 
state, and are currently in the process of four major projects 
in terms of consolidating state agencies and state employees in 
four different parts of our fair state, to the tune of over a 
half a billion dollars that I've signed off on. 

By the way, we also operate, through our 
Telecommunications Division, the third largest telephone 
operation in the state, and the thirteenth largest in the 
country. 

Our mission is quite clear. As the business manager 
for the state, we're to derive the best value in necessary and 



64 

1 essential services in a timely manner at the lowest possible 

2 cost to our customer agencies. The better DGS performs its job, 

3 the better and more effectively our customer agencies can serve 

4 California taxpayers and citizens. 

5 In order to accomplish this mission, the Department has 

6 embarked upon a strategic and significant change in direction. 
That is, to become a customer-focused and results driven 

8 organization, not one of process and control. 

9 Our specific Department goals, as outlined in the 1995 

10 budget bill, are to achieve by June 30th, 1999, or before, a DGS 

11 that will: one, provide services the Legislature or Governor 

12 mandate; two, offer other essential and necessary services on a 

13 nonmandated and cost competitive basis; and three, discontinue 

14 control functions not required by the Legislature, the Governor, 

15 or our customer agencies. 

16 To achieve this goal, we must affect a serious change 

17 in our departmental culture. Real change happens only when you 

18 have a talented, dedicated, and motivated workforce with an 

19 attitude and work ethic that understands and accepts the reasons 

20 and need for this kind of change. 

21 I've been blessed with an executive team, office 

22 chiefs, and a workforce that is most receptive to the need for 

23 DGS cultural change. 

24 After eleven-and-a-half months on the job, nearly 700 

25 meetings, and 40 speeches or presentations, I can share with you 
2 6 first-hand that I feel quite strongly about DGS's capability of 
27 delivering on our promises. 

2 8 I've met with our customers, and I've heard the good, 



65 

the bad, and the downright ugly comments about the DGS of the 
past. 

But having said that, I find no customer agency or 
other stakeholder unwilling to work with us to build a better 
DGS, because they know how helpful we can and could be in 
helping them accomplish their missions. 

I've said before, I'm a sucker for a challenge. After 
only 11 months on the job, I can share with you that with the 
right leadership, attitude, and ethic, good people and continued 
support from you and the administration, we have begun to make 
the changes necessary to again make California competitive. 

I ask you today most respectfully to allow me more time 
to complete the job. 

Thank you. 

CHAIRMAN LOCKYER: Thank you, sir. 

Maybe we should start just by taking any testimony, 
since there are so many different dimensions to this job. It 
might help us focus in on relevant things. 

If there are people present who wish to comment, either 
for or against, or express concerns, please feel invited. 

Who's first here? 

MR. AMARO: I'll go first. 

Mr. Chairman and Committee Members, my name is Allen 
Amaro. I'm a representative for the Disabled Veterans Business 
Enterprise Network, which comprises of approximately 100-plus 
certified disabled veteran businesses here in Sacramento and 
Northern California. 

I hope that you had an opportunity to read our one-page 



66 

1 letter in opposition to Mr. Stamison being confirmed as Director 

2 of General Services. If you would like, I could in less than 

3 one minute -- 

4 CHAIRMAN LOCKYER: Yes, tell us the concern. 

5 MR. AMARO: It says, the Disabled Veterans Business 

6 Enterprise Network, Sacramento and vicinity, strongly opposes 
the confirmation of Peter Stamison as Director of General 

8 Services because: after nearly one year, one, he has failed to 

9 establish goals for California's small businesses pursuant to 

10 Government Code 14838, which constitute 98 percent of all 

11 California companies. 

12 What we mean by that is, 98 percent of the businesses 

13 in the State of California are classified as small businesses. 

14 He has failed to establish a small business and 

15 disabled veteran business advisory council to oversee and assure 

16 that fair and impartial implementation of meritorious programs 

17 pursuant to Government Code — Military and Veterans Code 999.4, 

18 which have been established by the Legislature. 

19 Three, the direct consequence of his inaction has 

20 caused significant damage to the small business community, and 

21 the loss of subcontracting opportunities to disabled veterans — 

22 you'll have to excuse me — the opportunity to — measures. 

23 It says, we have now suffered about a 70 percent 

24 reduction in those outreach to disabled veteran businesses, and 

25 we find that partially as a result of anti-affirmative action 

26 measures. 

27 And though we're not listed in the anti-affirmative 

28 action bills, we still suffer collateral damage to that for the 



67 

simple fact — I'd like to explain this question. Maybe I'm 
getting ahead of myself. 

The simple fact of it is, as the minority and women 
programs seem to be fading out, and there seems to be some 
opposition to that program, we have suffered collateral damage 
in the fact that they're — if no contacts need to be made, or 
no emphasis is put outreach to those, we fall in the same goal 
type of program. 

And I sit at a data base and control a data base of 
over 2,000 contacts. We have suffered 70 percent reduction in 
that data base in the last one year. 

Number four, he has sponsored new procurement 
initiatives. California Reform Act, which is CARA, AB 3307, 
which is Marilyn Brewer, which have significant impact on the 
small and disabled veteran business community, in that these 
initiatives would have the following adverse impact: (A) reduce 
the number of contracts that are approximately 4,000 to about 
200, so that the top 200 to 100 suppliers would be the only 
state suppliers; (B) wants state procurement officers to get in 
bed with contractors to establish long-standing relationships to 
benefit the state; (C) wants to modify lowest responsible bid 
doctrine to allow the state more flexibility in selection of 
bids that provide best value, not lowest price to the state; (D) 
improvise a DVBE program that is unchanged, but deletes the 
five-step process for good faith. 

If you want me to explain that part of it, it's that 
there 'd be no way to oversee, make sure that we're treated in a 
fair and equitable process. 



68 

1 Then five, it says, clearly the total adverse impact of 

2 the new procurement initiatives contained in AB 3307, which is 

3 293 pages, is far too numerous to be addressed here. Those that 

4 have been cited represent the most significant, because they 

5 directly impact contracting opportunities lost or to be lost to 

6 the California small business disabled veteran community. 

7 The DVBE Network strongly opposes confirmation of Peter 

8 Stamison as Director of General Services, and I'm here as member 

9 of that organization to answer any questions. 

10 CHAIRMAN LOCKYER: Maybe when they get to be kind of 

11 detailed, we ought to ask for some response rather than wait for 

12 a generic one. 

13 I guess the issue that's been raised deals with trying 

14 to dramatically reduce the number of individual contracts that 

15 would be entered into, and the thought that if it goes from 

16 4,000 to 200, or whatever numbers — is it 4,000? Is that the 

17 number. 

18 MR. AMARO: Yes, approximately. 

19 CHAIRMAN LOCKYER: That there 'd be greater difficulties 

20 for small business, whether it's the disabled vets or whom ever, 

21 but just small business generally to get a piece of the contract 

22 work. 

23 Can you help us understand what's going on? 

24 MR. STAMISON: Well, I would agree with Mr. Amaro that 

25 it would be very difficult, in fact, if the legislation said 

26 that, for anybody to do business in the state if you're going to 

27 take it down to 200. 

2 8 On the contrary, the legislation that we're sponsoring, 



69 

the Brewer bill, 3307, intends to do just the opposite. 

We're very concerned with the current process as it 
exists today through all areas. 

In fact, one of the many goals we're trying to obtain 
is to entice more suppliers to bid on state contracts. AB 3307 
achieves this through the competitive negotiation process, best 
value contract criteria, a faster, less costly protest process, 
prompt payment provisions, and decentralizing the acquisition 
process. 

We again, like Mr. Amaro, are very concerned. In fact, 
in April of 1992, the Procurement had a total of 13,374 
prequalified vendors on bid lists. As of June, 1995, the list 
has dwindled to 7720, a 57 percent decrease. This happened way 
before my watch. 

I think it's indicative of the fact that the way we are 
doing things now, the most onerous procurement process in the 50 
states in this . fine Union, happens to exist the this state, and 
we are trying to clear it up through CARA. 

CHAIRMAN LOCKYER: Could you explain what's different 
conceptually? I haven't read this 300-page bill, so I'm 
unfamiliar with the Brewer proposal. 

What do the other states do that's different than us, 
or that we do that's unusual, that you're trying to simplify? 

MR. STAMISON: We're trying to put — right now, there 
are three different levels of rules and regulations that 
encompass general purchasing for the state. We have a different 
set of rules, and regulations, and law, for commodities, a 
different set for information technology, and a different set 



70 

1 for services. 

2 We want to streamline that and make one set of criteria 

3 exist for all of those. That's what some of the most successful 

4 states have done already. In fact, the federal government, 

5 through their usage, has attempted to do that and is successful 

6 in doing that. 

7 Senator, by decentralizing procurement authority, 

8 state entities will be able to contract with businesses located 

9 in their area. Decentralizing is a major benefit to both small 

10 businesses and state agencies. 

11 DGS wants to be an enabler, a facilitator of 

12 businesses. And when it makes best sense for individual 

13 agencies to go out and do their procurement, we will provide 

14 them with the expertise and the knowledge, and the capability to 

15 allow them to do that, and thereby significantly lower the 

16 gestation period that exists between a bid process and award. 

17 Hopefully, doing it this smart and this quickly, we're 

18 going to avoid the tremendously costly [sic] to the taxpayers, 

19 to the vendors, to the end users of this rather onerous protest 

20 process that we have right now in our system. It really stinks. 

21 I don't think there's anybody in the small business 

22 community, or any business community, that doesn't agree. 

23 We are losing our suppliers and our intention good 

24 vendors, droves of them, a 57 percent decrease since April of 

25 '92. And we're concerned about that, and we want to do 

2 6 something about it. We want to change it, and 3307 will help us 

27 do that. 

28 MR. AMARO: May I make a comment to Mr. Stamison. 



71 

Mr. Stamison said that he was trying to increase the 
amount of contracts, not decrease the amount of contracts. 

I sat before a presentation of CARA in December of 1995 
and listened to one of his deputies, Mr. Charles Chuck Grady, 
make this statement. 

This letter that I have signed, I've signed as to what 
I heard personally, when I sat in front there, of the 
presentation and listened to the presentation being put on. 

The presentation was put on. It was very clear. At 
that time, I voiced some concern about how small business would 
be able to act in a procurement process when they want to take 
the total number of contracts — not vendors, contracts — 
decrease them from 4,000 to one in 200. 

They used one example, and I'll cite you this example. 
It was Office Depot. We can use Office Depot, get turn-around 
response right now, rather than go out and let individual people 
bid these contracts. 

So, I don't mean to be argumentative with Mr. Stamison, 
but I was there. That's what I heard. 

Another thing is, he quotes the fact that we've had a 
decrease in over-all vendors since 1992. We've had a decrease 
in business since 1992, a very large and significant decrease in 
over-all business since 1992. 

I can see where some of those vendors went. A lot of 
those were small businesses, like myself and the people that I 
represent, because of lack of opportunity and general recession. 

CHAIRMAN LOCKYER: I think it's probably impossible for 
us to hear all the details of this bill. That's going to be 



72 

1 heard anyhow some day in CO., I guess, but just to know there's 

2 a concern. 

3 Senator Ayala, did you have a question? 

4 SENATOR AYALA: Just an observation. 

5 I had met with Mr. Stamison, and at that time I had no 

6 letters of opposition. 

All of a sudden, I get a whole bunch written almost 

8 identical, similar to the one the gentleman presented. 

9 They all start off by saying he has failed to establish 

10 goals for California's small businesses, 14838(a) Government 

11 Code, which constitute 98 percent of all California companies. 

12 It seems like the same person wrote them all. Who 

13 wrote your letter? Did you write your own letter? 

14 MR. AMARO: I wrote my own letter. 

15 SENATOR AYALA: Everybody copied you. 

16 MR. AMARO: I can't tell you whether everybody copied 

17 it or not. We are a small business community. We all interact, 

18 and we do go to similar meetings. 

19 SENATOR AYALA: But these are written from all over the 

20 place. They're almost identical, so I'm suspicious of something 

21 like that. 

22 MR. AMARO: All I can say is, Senator Ayala, they are 

23 pertinent, true facts that concern the small business community. 

24 SENATOR AYALA: I don't dispute them. It just seems to 

25 me the same person wrote all the letters. That's the only thing 

26 I'm questioning. 

27 CHAIRMAN LOCKYER: Next witness. 

2 8 MR. GUERRERO: My name is Paul Guerrero. I represent 



73 

the United Minority Business Entrepreneurs of California. 

I was also asked to speak on behalf of the Northern 
California Latin Business Association, CHISPAS. 

I will say, I wrote my letter. It does look like his. 
I went to some of the same meetings, and have the same concerns. 

But my concerns go beyond him. Because, at my age, 
when somebody tells me they want to make change, and they want 
to eliminate the criteria that you use to measure, I get 
nervous, because right now, we have a good system. I mean, 
everybody turns a bid in, and who's ever low gets the contract. 
That's the way it should be. 

And if we have a small business program, or we have a 
minority program, or we have a disabled veterans program, there 
has to be a criteria to measure it. To simply have the program 
is worthless. 

Now, I didn't read this 293-page bill. We divided the 
thing up, and people have read it. We've had people analyze it. 

What it does, one of the things it does is eliminates 
the Office of Small and Minority Business. 

Now, if they wanted to take out the word minority, 
fine, but they should have kept the Office of Small Business 
because it has a measurable criteria. It substitutes that 
measurable criteria for the criteria of the Director. And I 
can't quantify what his measurement is. 

Here on this page, and I just scratched out — this is 
stuff that I've found in here. It establishes goals consistent 
with those established by the Director. And to date, the 
Director has established no small business goals. So, what do 



74 

1 we measure by? Nothing? 

2 And it scratched out Office of Small and Minority 

3 Business. 

4 This goes on throughout the thing. It puts in words 

5 like, the Director will contract out, the Director will award 

6 contracts. And then, consistent with that, with those words 
that are put in, it takes out the words that say, where ever the 

8 total consideration of a contract exceeds $2,500, it shall be 

9 awarded to the lowest responsible bidder. That's scratched out 

10 throughout here. 

11 I get nervous when someone tells me that they're going 

12 to take 4,000 contracts and narrow them down to 100 and use the 

13 words -- because Allen wasn't the only person present at that 

14 meeting -- and use the words, we're going to get in bed with a 

15 hundred contracts; that's the way we do business in the private 

16 sector. 

17 This gentleman did not say it, but one of his deputies 

18 did. 

19 I get nervous, and I want to see us have the low bid 

20 system. 

21 If that's what the new Director is bringing to 

22 California, boy, I hope that this Committee doesn't buy it, 

23 because it's something that we don't need. 

24 We need a low bid process, and we need someone with 

25 that concept, and we need someone with minority business — not 
2 6 minority business — yeah, minority business, but small business 

27 oriented, too, because most minority businesses are small 

28 businesses. But we need someone that has that focus. 



75 

Also, we have an initiative coming up in November, and 
the people of the State of California are going to decide 
whether we have a minority business program or not. 

I don't think we need the Director of General Services 
to usurp that decision. 

I'm quite sure that this bill will never get past the 
Senate. 

But beyond that, it's the concept of it, and it's the 
thinking, the reasoning behind somebody who would even proffer 
this to the Senate that concerns me. 

And so, I would urge you to vote no; to not, you know, 
put this man before the Floor, because he scares me. 

Thank you. 

SENATOR BEVERLY: I'm a little confused. 

I think everybody's goal is the same, to do what's best 
for the state and to help business, small or whatever. 

Let me ask a question. Does your proposal do away with 
the lowest responsible bidder concept? 

MR. STAMISON: We are talking about the best value for 
the state, Senator, our proposal. 

CHAIRMAN LOCKYER: What are the words? 

MR. STAMISON: The exact wording? 

CHAIRMAN LOCKYER: I guess we'd better ask, the old law 
and the new law? 

MR. STAMISON: I don't have it, I don't have a 
comparison. 

CHAIRMAN LOCKYER: Do you have the bill with you? 

MR. GUERRERO: Yes, I do. 



76 

1 CHAIRMAN LOCKYER: What's the current standard and 

2 what's the bill -- 

3 MR. GUERRERO: The current standard right now is the 

4 lowest responsible bidder. 

5 CHAIRMAN LOCKYER: What's substituted? 

6 MR. GUERRERO: The Director. Establish — no, over 

7 here, pardon me. 

8 The Department shall contract with qualified 

9 architects, engineers — this is that portion of it — for the 

10 performance of work when it is determined by the Director of 

11 General Services that the obtainable staff is unable to perform 

12 the particular work, period. 

13 It's like an open book to me. 

14 MR. STAMISON: Let me double-check here. 

15 I have Steve Olsen, my Chief Deputy here, who was very 

16 much involved in the crafting of this wording. 

17 MR. OLSEN: Senator Lockyer, Members of the Committee, 

18 Steve Olsen, Chief Deputy of General Services. 

19 A complete explanation of all the changes, as you're 

20 aware, would take quite some time. 

21 CHAIRMAN LOCKYER: We don't want to rehear the bill. 

22 MR. OLSEN: The concept of best value is one that 

23 already exists in state procurement law. It is a clearly 

24 established principal for information technology, acquisitions. 

25 This particular bill would expand the use of best value 
2 6 concepts under certain circumstances. 

27 Clearly, in situations where the commodity or service 

28 is very clearly described, in which there is a very specific 



77 

specification of the goods or services that would be acquired by 
the state, that is a situation in which the state would continue 
to use low bid as the basis for awarding the contract. 

The best value concept is a situation, and it's an 
emerging procurement concept that is used by a wide variety of 
public agencies to make decisions about procurement in 
situations where the actual solution is not well defined. And 
it's one that's already used in the technology area. 

Basically, the concept is that the state, rather than 
saying this is exactly the list of specifications that is 
required to solve the state's business problem, the state 
instead would say, this is the business problem. We need 
assistance from vendors in describing what the solutions would 
be. And there is a very systematic method to assign value to 
the different solutions that are proposed by the different 
vendors that would be competing. 

The bill specifies the circumstances in which best 
value is appropriate and which it is not appropriate, and it 
does specify clearly the situations in which low bid is 
appropriate and not appropriate. 

CHAIRMAN LOCKYER: Well, for purposes of today, I guess 
it's fair to say there is a recommended change in the 
procurement policy from the previous, perhaps overly rigid, or 
almost universal, lowest responsible bidder, or lowest qualified 
bidder sort of approach to something that is more of a 
negotiated price. 

MR. OLSEN: No. 

CHAIRMAN LOCKYER: Is that not how this works? 



78 

1 MR. OLSEN: No. 

2 The prices under the best value concept are not 

3 negotiated. 

4 There is a method that is established to assign points 

5 to the different proposals that are made by vendors. It is a 

6 system tfiat is open and competitive, and the people that are 
making decisions about which contractor would receive the 

8 state's business would be required to document the reasons for 

9 awarding the points in each and every instance. 

10 CHAIRMAN LOCKYER: All I can say is, my experience of 

11 every state contract that awards grants and other things with 

12 points, almost always it's overly political. And they admit 

13 that they made mistakes every time you ask them about why they 

14 did it the way they did it. 

15 It sounds like it could be another one of those. 

16 G.O. will hear this bill. There's at least a couple of 

17 Members who are present who probably will hate having to hear it 

18 all again. 

19 So, let's move on to a different topic, if there is 

20 one. 

21 MR. STAMISON: Could I add just two things to the 

22 comment that Mr. Guerrero said. 

23 Number one, I have about fifteen letters here from 

24 small business owners that have written either to the Governor, 

25 myself, or my predecessor, saying: your system stinks. I don't 

26 want to do business with you anymore. Do you realize how 

27 onerous it is, and what have you. 

28 So, to say that our system is working just fine now and 



79 

we shouldn't change it, I really — I've got to tell you, being 
a small business owner myself, that's wrong. We need to change 
that. 

Secondly, to say that I avoided dealing with the small 
business community — my immigrant grandparents came over to 
this country. They were both small businessmen. I grew up in a 
small business. I waited tables at my father's restaurant. 
I've been in two small businesses myself. 

I'm probably as aware of the problems of small 
business, and doing business in the State of California, as any 
of my 13 predecessors as Director of DGS. 

So, to say I'm not sensitive to small business owners 
saddens me somewhat . 

I have set up a Small Business Advisory Council. In 
fact, Mr. Guerrero and his friends had brought it to my 
attention that we should be doing some more things. 

There was a concern. He asked me if I would set it up 
at that moment. I said, no, I had to think about it. 

Within two weeks, working my executive staff, I did set 
in motion the Small Business Advisory Council. Interviews have 
been made. In fact, Mr. Guerrero was invited to come on out, 
and we are soon to announce our Small Business Advisory Council. 

CHAIRMAN LOCKYER: Unless it's substantial, I don't 
think we should get into a he-said-she-said. 

MR. GUERRERO: I just wanted to point out that we did 
ask him to set up a Small Business Advisory Council made up of 
small business organizations. Rather than do that, one was set 
up with about nine individuals. I don't know who's going to be 



80 

1 on it, but it lacks constituency/ and we were looking for 

2 something that would represent small business on a broad basis 

3 and would meet on a regular basis. 

4 That's all. 

5 CHAIRMAN LOCKYER: In this domain are these kinds of 

6 issues. 

The one I would want to express concern about/ and I 

8 expect you simply to restate the Governor's policy/ but it's one 

9 about which I emphatically disagree, is the elimination of the 

10 goals and the Office on Women and Minority Participation. 

11 I can't tell you how strongly I disagree with the 

12 policy direction of the Governor. 

13 You're his appointee. I expect you to probably 

14 dutifully follow that and probably believe in it. 

15 So, the question in my mind is, whether we should turn 

16 you down as a way of expressing our disagreement with the 

17 direction that your agency and your boss is going. 

18 And I don't know the answer to that yet. I haven't 

19 sorted that one out. 

20 I'm tempted to vote no for that reason, and it has 

21 nothing to do with your qualifications. And then, I guess we'll 

22 just do it with whoever they sent over. 

23 We won't wait a year next time, so we won't 

24 inconvenience people in their private pursuits, as often occurs 

25 when you leave home, and all of that, and spend a year in 

26 Sacramento, and then get sent somewhere else. 

27 But if you want to defend it, or talk about it, please 

28 do. I expect that you would say what any loyal appointee would 



81 

say about the topic when you have such a clear statement from 
the Governor. 

He's not my boss, and I disagree. I think it's wrong, 
and I intend to fight it. Now, whether fighting it should 
extend to turning down the people who are advocates for that 
position, I'm not sure yet, but I think it does compel me to do 
that. 

Different topic, sir? 

MR. PARKS: On continuing, my name is Donald Parks. My 
company is called Information System Services. I'm also 
President and CEO of Applied Technology Incorporated. 

CHAIRMAN LOCKYER: Is this the small business issue 
again? 

MR. PARKS: Yes. 

I'm a member of the Disabled Veteran Business Network, 
and I did write all my own correspondence. 

CHAIRMAN LOCKYER: I'd like to simplify this by saying, 
you agree with that same concern that's been expressed? 

MR. PARKS: Yes, I do. 

One of the concerns about me, I'm a ten-year military 
veteran. And I am very much concerned with, and I think it was 
obvious in terms of Mr. Stamison's experience in the public 
sector area. 

I'm a military person. I'm used to rules, regulations, 
policies and procedures. 

I've tried to volunteer in trying to make a 
contribution to Mr. Stamison's role in General Services in 
things that I saw were discrepancies. 



82 

1 For example, the Americans for Disabilities Act, which 

2 was supposed to be implemented in 1993, General Services hasn't 

3 started yet. And yet, we have a program saying, come on, 

4 disabled vets, participate. And then, when you go to 

5 participate, saying, we can't accommodate you. This is 

6 ludicrous. 

7 I'm a member of the President's Committee for the 

8 employment of Handicapped. I've worked as a consultant to the 

9 Department of Rehab for their technology systems analysis. 

10 I have some ideas that I've tried to make 

11 contributions. I had to go all the way to the Governor's Office 

12 just to get an audience with his staff to present my concerns. 

13 You know, I am very much concerned where I do not 

14 really see that Mr. Stamison, and the way that the agency has 

15 been running, is allowing enough public input, enough public 

16 response, enough public involvement. 

17 What I hear is, we're going to run this business the 

18 way we're going to. This does not sound like a state 

19 government. 

20 There's something wrong here. There's something, very 

21 seriously — when every communication that I get from the 

22 Department has to come through the Legal Office. I mean, I 

23 would think that a head of a major agency would have the 

24 strength of his convictions to put his signature behind 

25 something that he stands for from his department. 

26 I'm very much concerned about these things. 

27 I've tried to make constructive suggestions on things 

28 that were clear violations of law, and try to make comments, and 



83 

my concern is, I find there's policy being created that says we 
have discretion to do the policies. And there's no criteria and 
procedures and standards for application of the things. 

CHAIRMAN LOCKYER: This is in the bill, you're talking 
about again? 

MR. PARKS: This is in my contacts as a vendor, dealing 
with the Department over the last year. 

I was in a contract last year where, after I wanted to 
participate in a bid, and I asked for a copy, they said, oh, you 
need to get it through a prime contractor. So, I had to 
assemble a bunch of small businesses that said, we'll 
collectively participate. Guess what? Addendum One came out 
and said, no joint bids. They started changing the rules after 
procedures . 

And the message I was getting is, small businesses, 
come back and be a big business and then we'll talk to you. 
This is very disturbing to me. 

There's something here that I really don't feel 
comfortable about. I'm an active participant. I've been a 
business owner for ten years. I've had international 
businesses. I used to own the only disabled veteran computer 
manufacturing service retail business in the whole nation. And 
the doors are closed on me. This is quite disturbing. 

CHAIRMAN LOCKYER: Mr. Parks, I think you'd probably 
agree that it would be unfair to attribute to Mr. Stamison a 
culture that grew up and preceeded him and is very, very 
difficult to change. 

Some of the things you've mentioned are probably the 



84 

1 kinds of policies or attitudes that he's mentioned that he hopes 

2 to change. 

3 And so, you have a forceful presentation to make. And 

4 I hope he and his staff took notes about the complaints so that 

5 you'll perhaps hear -- 

6 MR. STAMISON: We have, Senator. 

CHAIRMAN LOCKYER: — specific feedback. In fairness 

8 to him, I don't want to blame him for something that he didn't 

9 have anything to do with, other than the fact that maybe the 

10 philosophy, or as it's embodied in the bill proposal or other 

11 things, might contribute to disadvantages for small 

12 business. 

13 MR. PARK: I think the main concern is that Mr. 

14 Stamison is doing his job as the Governor appointee. And I'm 

15 very much concerned, because there's things that just don't make 

16 sense. 

17 I think there's a higher responsibility for this 

18 Committee to balance out the balance of powers here because — 

19 CHAIRMAN LOCKYER: We try to do that, but the Governor 

20 wins almost all the fights. 

21 Thank you, sir. 

22 MR. PARK: Thank you very much. 

2 3 CHAIRMAN LOCKYER: A different issue, anyone at all, 

24 other topics. 

25 MR. DAVENPORT: Mr. Chairman, thank you. I'm Allen 

2 6 Davenport with the Service Employees International Union. We do 

27 have a different issue here, and I want to frame it very 

28 carefully, because this is the kind of issue that could go far 



85 

afield into areas I'm sure many Members of the Committee don't 
want to be on the Committee for. 

CHAIRMAN LOCKYER: Could you tell us what it was we 
wanted to be here for? Or, as John Lewis said, you didn't read 
me my rights before I got elected to Rules. 

MR. DAVENPORT: Let me get basically to the point, and 
then I'll backup here a little bit. 

This has to do, I think, with Mr. Stamison's 
responsibility in regard to contract administration, and has to 
do, particularly in our case, with building services. 

Specifically, Mr. Stamison has a contractor, his agency 
has a contract with a company called Compass Building Management 
to manage the Board of Equalization building at 450 N Street. 
They have, in turn, contracted with a company called Summers 
Building Maintenance to do the janitorial services there. 

Our particular question to Mr. Stamison has to do with 
whether he is upholding his — and enforcing his contract with 
Compass, which says that they will hire a reputable local 
operator to do the building services. 

We have — we had reason to believe that the company 
there was not reputable, and I've provided the Members of the 
Committee with a long list of things that they have done or are 
charged with having done. I don't want to bring all of those 
cases here, given the hour — 

CHAIRMAN LOCKYER: Just summarize it. 

MR. DAVENPORT: To summarize it, they have basically 
violated with impunity many labor organizing laws, including 
blatant formation of a company union. These charges have been 



86 

1 taken to the National Labor Relations Board, and they have 

2 offered to, on occasion, settle these charges and essentially 

3 cease and desist. And then most recently, they have been cited 

4 again for refusing to live up to their own settlement 

5 agreements. 

6 Secondarily, they are also — and there are long list, 
fifteen specific cases in front of the National Labor Relations 

8 Board. In addition, they've had wage and hour violations. 

9 Those are in front of the Labor Commissioner and in the Federal 

10 Department of Labor. They're in Sacramento Superior Court, or 

11 their employees are. They are on a number of assault — on an 

12 assault case, and some of the labor law violations. They've got 

13 a sexual harassment case pending. They have workers' 

14 compensation problems with the company union that they formed. 

15 They have Fair Employment and Housing cases. 

16 Again, without going into the details here, the 

17 question I would lay before you, and we did lay before them, is, 

18 is this a reputable company? And should the Department of 

19 General Services continue to let its contractor continue to 

20 subcontract with someone who is not reputable. 

21 Now, I want to say that we have a letter from the Chief 

22 Counsel, dated in December of '95, when we brought the first of 

23 these issues to the attention of the Department. We went 

24 through channels here, okay, and they said they are not an 

25 involved party. 

26 On the basis of that, we came to you, Senator Lockyer, 

27 and you were kind enough to ask the same question of Legislative 

28 Counsel. And Legislative Counsel, upon reviewing the contracts 



87 

that they had at hand, said that it was perfectly within Mr. 
Stamison's authority to say to Compass that it doesn't look like 
that subcontractor is reputable, and perhaps you ought to do 
something about that. 

And so, you mentioned earlier in the hearing, and 
frequently here, about a conflict in philosophy here. There's 
no question in my mind that this is a matter of discretion for 
Mr. Stamison to decide whether a company is reputable or not, 
and whether he wants to enforce a subcontract, a clause about a 
subcontractor . 

But we think this company is not reputable. We think 
that a lot of other people think that they're not reputable, 
people who are in a position, administrators of various laws, 
and we would ask you to check and see if there is a values 
determination here that's important to your vote, and important 
to how you think this Department ought to be administered. 

CHAIRMAN LOCKYER: Did you want to comment at all on 
this issue? You're familiar with it, I assume. 

MR. STAMISON: This information came to my attention 
late last week. And I can't say that I've thoroughly studied it 
to this point in time. 

I am aware that there are some major issues that the 
union has with Summers. That's before the NLRB in May, and at 
that point in time, they'll make a decision. They'll make our 
course very clear. 

CHAIRMAN LOCKYER: Well, I note that you were appointed 
on April 28 of last year, and on the third of May, Equalizer 
Klehs, Commissioner — what is their title, Commissioner? 



1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

26 

27 

28 



88 

Anyhow, the member of the Board of Equalization, Klehs, wrote a 
letter a few days after the appointment saying, hey, we seem to 
have a problem, and would you review this. 

Well, it's a year later, and I guess the legal staff 
rendered some opinion. 

MR. STAMISON: And we did respond, and there were some 
discrepancies on the prevailing wage. And that was corrected, 
so we did enforce that. And in our Buildings and Grounds Office 
has been auditing and monitoring the progress. 

CHAIRMAN LOCKYER: All right. Hopefully, then, we'll 
hear more from you — 

MR. STAMISON: Yes, absolutely, Senator. 

CHAIRMAN LOCKYER: — about what would be appropriate 
in future relationships under this contract, if there's new 
information available. 

MR. STAMISON: By all means. 

CHAIRMAN LOCKYER: We'll ask that they make sure to 
give you any information you may not have seen last week. 

Were there others present? Did everyone testify that 
wished to. 

SENATOR BEVERLY: Mr. Johnson, I've been waiting all 
afternoon. 

MR. JOHNSON: Mr. Chairman, Members of the Committee, I 
met Peter Stamison about a year ago. 

CHAIRMAN LOCKYER: You have to identify yourself. 

MR. JOHNSON: I'm Eppie Johnson. I'm Chairman of 
Eppie's Restaurants, past President of the California Restaurant 
Association, Director of the California State Insurance 



89 

Compensation Fund. 

I met Peter about a year ago. I was very impressed. I 
said to myself, a guy with your qualifications, what are you 
doing taking a job like this? I mean, evidently the Governor 
went to an executive search firm to find a person with lots of 
ability, energy, and qualifications to be able to take over the 
General Services administration, and be able to modernize it, 
and possibly save some money in running the organization. 

Needless to say, the restaurant business hasn't been 
the best. My company hasn't made any money for the past three 
years. So, what we're trying to do is try to be able to cut 
down our expenses, even though the good Senator eats there very 
often. One of my best customers, by the way. 

CHAIRMAN LOCKYER: Me, too. 

MR. JOHNSON: One point I want to bring up. The key 
is, we have a highly qualified person that the Governor 
appointed to this position. 

Now, I know when I hire a person in a top job, he gets 
a certain mission; he gets certain charges. There are certain 
things you've got to do. And whether the public likes it or 
not, if that individual accepts the job, he has to accept the 
charge, whatever it might be. 

So, you as the Chairman, and some of the Committee 
Members may not believe in what the Governor wants to accomplish 
as far as affirmative action. 

I want you to know, I'm a very conservative Democrat, 
by the way, okay. 

And the point is, though, I don't think we're 



90 

1 accomplishing anything if we're trying to pass a message on to 

2 the Governor saying, we don't care for your policies, Mr. 

3 Governor. As a result, we're not going to confirm the 

4 appointment of this gentleman here who's very highly qualified. 

5 What it does is, it puts the Department in chaos for 

6 another five or six months, until someone else is found. Just 
like me, when my president resigned, it took me three months to 

8 find a new president. Let me tell you, things went to hell in 

9 those three months. Things just don't go along without an 

10 executive. 

11 So, the point I'm trying to say is, whatever' s got to 

12 be fixed should be fixed. If this bill is a bill that you don't 

13 care for, then that should be fixed when that bill goes on 

14 through. 

15 What I'm saying is, it doesn't make business sense to 

16 be able to take a man of his qualifications, and by denying him 

17 confirmation, pass a message on to the Governor. 

18 The only way we're going to make things work in 

19 California is by cutting our expenses. I mean, Senator Petris 

20 said, well, the situation of all the smog in the Los Angeles 

21 Basin, let me tell you, business has gone to hell. 

22 We've lost our defense, yes, but we've lost other 

23 things. I hear more people, young men in their thirties, say to 

24 me, it's tough trying to be in business; it's very difficult. 

25 We're over regulated. So, if we can find some way that 

26 we can cut down the regulations, streamline things, cut down the 

27 burden, it's going to help all the people in the State of 

28 California. 



91 

I became a Director of the State Compensation Insurance 
Fund because I felt possibly we might be able to do something as 
far as workmen's compensation reform. That happened. It was a 
tough battle. It took about seven years, both sides. And what 
it's done is, kept a lot of small businesses in business. 

CHAIRMAN LOCKYER: Should we privatize that? 

MR. JOHNSON: I think it's ridiculous. 

CHAIRMAN LOCKYER: Keep it the way it is? 

MR. JOHNSON: What the Governor doesn't understand, I 
think, is the fact that if they sell State Fund, if there's any 
profit — there'll be very little — that goes to the policy 
holders. I think he didn't understand that. 

You need State Fund because we're like the insurance 
company of last resort. We insure 270,000 policy holders, and 
most policy holders who can't get an insurance policy, they come 
to us. 

CHAIRMAN LOCKYER: I'm sorry, I didn't wants to get you 
off on another topic. 

MR. JOHNSON: Let me tell you, Peter Stamison is a 
highly high qualified person. I'm very impressed by his 
qualifications, and there's other ways to pass the message on to 
the Governor. You have some problems with the minorities and 
the disabled, but I think you could very well solve this one. 

CHAIRMAN LOCKYER: Thank you, Mr. Johnson. Thank you 
for waiting so long. 

Other questions from Members at all? Let's see, it's 
Monday night. What's the soup, Eppie? 

Other questions from Members? 



92 

1 Did you want to add anything? 

2 What I'm going to suggest we do is, since we don't have 

3 an immediate deadline, to just take all the information and 

4 testimony, ask the questions, and ask the staff to follow-up 

5 with your staff so that we can have some answers to the 

6 questions that have been posed. And then we'll vote on some 

7 subsequent date. 

8 You've been very forthcoming. There's no question 

9 about your lengthy and significant experience in business 

10 management. So, let's see if we can figure out a couple of 

11 these remaining matters that maybe will make everyone 

12 comfortable with going forward. 

13 Next week, hopefully that'll be fast enough, even with 

14 General Services. 

15 SENATOR PETRIS: What's the deadline? 

16 CHAIRMAN LOCKYER: May 1. 

17 MS. MICHEL: And we're not meeting on April 27. 

18 CHAIRMAN LOCKYER: We could schedule a meeting if we 

19 had to. 

20 Anyhow, we'll figure out the schedule, but thank you 

21 very much. 

22 MR. STAMISON: Thank you. 

23 [Thereupon. This portion of the 

24 Senate Rules Committee hearing was 

25 terminated at approximately 5:17 P.M.] 
2 6 — ooOoo — 

27 
28 



93 



CERTIFICATE OF SHORTHAND REPORTER 

I, EVELYN J. MIZAK, a Shorthand Reporter of the State 
of California, do hereby certify: 

That I am a disinterested person herein; that the 
foregoing transcript of the Senate Rules Committee hearing was 
reported verbatim in shorthand by me, Evelyn J. Mizak, and 
thereafter transcribed into typewriting. 

I further certify that I am not of counsel or 
attorney for any of the parties to said hearing, nor in any way 
interested in the outcome of said hearing. 

, IN WITNESS WHEREOF, I have hereunto set my hand this 

CO _ day of U^TP^U , 1996. 





:lyn j. >mizj 

Shorthana RepcTrter 



298-R 

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SENATE RULES COMMITTEE 
STATE OF CALIFORNIA 



HEARING 



STATE CAPITOL 

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MONDAY, APRIL 22, 1996 



1:58 P.M. 



Evelyn J. Mizak 
Shorthand Reporter 



11 



APPEARANCES 

MEMBERS PRESENT 

SENATOR WILLIAM LOCKYER, Chair 

SENATOR ROBERT BEVERLY, Vice Chair 

SENATOR RUBEN AYALA 

SENATOR JOHN LEWIS 

SENATOR NICHOLAS PETRIS 

STAFF PRESENT 

GREG SCHMIDT, Executive Officer 

PAT WEBB, Committee Secretary 

RICK ROLLENS, Consultant on Bill Referrals 

NANCY MICHEL, Consultant on Governor's Appointments 

ALSO PRESENT 

DANIEL G. PENNINGTON, Member 

California Integrated Waste Management Board 

CHERYL K. PLILER, Warden 

California Correctional Center, Susanville 

Department of Corrections 

MICHAEL B. STOKER, Chairman 

California Agricultural Labor Relations Board 

PETER G. STAMISON, Director 
Department of General Services 

ALLEN DAVENPORT 

Service Employees International Union 

STEVEN A. OLSEN, Chief Deputy 
Department of General Services 

SENATOR DAN BOATWRIGHT 

JIM RAMOS, Coordinator 

Disabled Veterans Business Enterprise Network 

BERT BROCK 

Small Business Owner 



Ill 



INDEX 

Page 

Proceedings 1 

Governor's Appointees; 

DANIEL G. PENNINGTON, Member 

California Integrated Waste Management Board 1 

Background and Experience 1 

Questions by SENATOR PETRI S re: 

Staffer of Waste Board also 

Working for Republican Campaigns 5 

Request for Staffer to Write Speeches 

and Do Research 5 

Questions by CHAIRMAN LOCKYER re: 

Proposal to Consolidate Integrated Waste 

Management Board with Toxic Substances 

Control 7 

Questions by SENATOR AYALA re: 

Effectiveness of AB 939 8 

Possibility of Adding Wine and Liquor 

Bottles 8 

Questions by CHAIRMAN LOCKYER re: 

Independent Status of Certain 

Commissions 9 

Motion to Confirm 10 

Committee Action 11 

CHERYL K. PLILER, Warden 

California Correctional Center, Susanville 

Department of Corrections 11 

Background and Experience 11 

Questions by CHAIRMAN LOCKYER re: 

Adjustment to Climate Change between 

North Kern and Susanville 12 

Inmate Work and Educational Programs 13 



IV 



Waiting Lists for Programs 13 

Experience with Overtime Costs 14 

Efforts to Eliminate Illegal Drugs 

in Prisons 15 

Motion to Confirm 16 

Committee Action 17 

MICHAEL B. STOKER, Chairman, 

California Agricultural Labor Relations Board 17 

Background and Experience 17 

Questions by CHAIRMAN LOCKYER re: 

Current Assignment vs. Board of 

Supervisors 21 

Rule Making vs. Policy Making Decisions 21 

Table Grape Commission Case 22 

Enjoining Illegal Activities Pending 
Investigation 23 

Questions by SENATOR PETRIS re: 

Growers Seeking Injunctions in Superior 

Court 24 

Authority to Issue Injunctions 27 

Questions by CHAIRMAN LOCKYER re: 

Shrinking Budgets and Staff 27 

Workload 27 

Possibility of Integrating PERB and ALRB 30 

Questions by SENATOR AYALA re: 

Two Vacancies on 5-Member Board 31 

Agreement between Current Members 32 

Motion to Confirm 33 

Committee Action 33 



PETER G. STAMISON, Director 

Department of General Services 33 

Questions by CHAIRMAN LOCKYER re: 

Governor's Proposal to Privatize and 

Out Source Various State Functions 34 

Possible Changes in State's Construction 

and Leasing Process, and Role of 

Legislature 36 

Questions by SENATOR AYALA re: 

SEIU's Problem with Janitorial Services 

Contract at Board of Equalization Building .... 37 

Response by STEVE OLSEN, Chief Deputy, 
Department of General Services 39 

Questions by CHAIRMAN LOCKYER to MR. OLSEN re: 

DGS's Proposal to Review Determinations 

of NLRB 41 

Relevancy of Department of Labor Citing 
Subcontractor Twice 42 

Witness in Opposition: 

ALLEN DAVENPORT 

Service Employees International Union . 43 

Questions by CHAIRMAN LOCKYER to MR. OLSEN re: 

Estimate of Time Necessary to Resolve 

Matter 44 

Questions by CHAIRMAN LOCKYER to MR. STAMISON re: 

State-owned vs. Privately Owned Facilities 

in Sacramento Vicinity 45 

Proportion of Public vs. Private 47 

Lobbying by Building Owners 47 

Questions by SENATOR PETRIS re: 

Governor ' s Mansion 47 

Response by MR. OLSEN 48 



VI 



Statements in Support by SENATOR DAN BOATWRIGHT 50 

Statement by MR. STAMISON 51 

Further Witnesses in Opposition; 

JIM RAMOS, Coordinator 

Disabled Veterans Business Enterprise Network 52 

BERT BROCK 

Small Business Owner 55 

Closing Statements on Small Business 

Advisory Council by MR. STAMISON 55 

Motion to Confirm 56 

Committee Action 56 

Termination of Proceedings 57 

Certificate of Reporter 58 



P-R-O-C-E-E-D-I-N-G-S 
— 00O00 — 

CHAIRMAN LOCKYER: Mr. Pennington? 

MR. PENNINGTON: Hi, Senator. I have some statements 
here, if you would like. 

CHAIRMAN LOCKYER: Leave them there and the sergeant 
will pass them out. 

Did you want to start with your statement? 

MR. PENNINGTON: That'd be fine, if that's all right 
with you, Senator. 

CHAIRMAN LOCKYER: All right. 

MR. PENNINGTON: Thank you very much, Mr. Chairman, 
distinguished Members of the Rules Committee. 

I'm Daniel G. Pennington, and I'm honored to be here 
today as the Governor's nominee for California Integrated Waste 
Management Board. And I appreciate this opportunity to discuss 
my credentials with your committee. 

It seems somehow fitting that I should appear before 
you on Earth Day which is being celebrated throughout the state, 
and which our Board is actively involved. 

I believe my contribution to the Board comes in great 
part from my experience in environmental issues and economic 
development. While representing several trades associations in 
Washington, D.C., I played a role in shaping amendments to the 
Clean Air Act, the Clean Water Act, the Natural Resource 
Recovery Act, the predecessor to the Resource Conservation and 
Recovery Act. 

My experience in the developing of these laws 



1 solidified my strong personal belief that for any issue, an 

2 environmental and economic balance can be achieved. 

3 While working for the Rubber Manufacturers Association 

4 in Washington, I chaired their Environmental Committee, where I 

5 helped to bring considerable attention to the health, safety, 

6 and the environmental impacts posed by waste tires. 

In California state government, I worked for the 

8 California State Fairs and Expositions and at the California 

9 Department of Housing and Community Development. During my four 

10 years assignment as Director of Marketing at the State Fair, I 

11 helped to increase Fair attendance and develop programs that 

12 doubled nonfair program income. 

13 At the Department of Housing and Community Development, 

14 I served first as Chief, Division of Community Affairs, where I 

15 directed a portfolio of 32 different low-income housing 

16 programs. I then served as the Department's liaison to the 

17 Century Freeway Housing Program, responsible for developing 

18 replacement housing for those displaced by the construction of 

19 the freeway. 

20 While at the Waste Board, I have worked to put both my 

21 environmental knowledge and my market expertise to good use. 

22 And I believe my range of experience has enabled me to bring a 

23 brand of leadership to the Board necessary to help us achieve 

24 true integrated waste management. And integrated is the key 

25 word here. 

2 6 In establishing our 25 and 50 percent statewide 

27 diversion goals, AB 939 set up a hierarchy of methods to achieve 

28 these goals, source reduction, recycling and composting, and 



environmentally safe disposal and transformation. In the most 
important sense, integrated refers to synergy between the 
elements of the hierarchy as we set policy and implement our 
programs . 

For instance, we see how diversion offers the benefit 
of resource conservation, but we derive from it expanded 
landfill capacity as well. And when we successfully enact 
regulatory reform, the relief derived [sic] to the industry is 
complemented by boosts to diversion. Making all of these 
activities function in harmony is the driving challenge of 
integrated waste management for our Board, and we've embraced 
that challenge with enthusiasm. 

Integration is something that's also reflected by my 
management style. Upon being elected as the Board Chairman, and 
soon after, in a personal letter to my colleagues on the Board, 
which I have provided to you, I expressed my vision for the 
Board and the working partnership among Board members. My 
approach to this job has been to listen to all sides, balance 
the interests involved, and vote not by politics, but by policy 
and principle. 

I believe this approach has helped forge a working 
partnership among the Board's members and those affected by the 
Board's work. And I believe that that's been a pivotal factor 
in our success. 

We're proud of our success in delivering regulatory 
relief, reducing costs, and empowering local government, all 
while maintaining high standards of protection for California's 
people and resources. 



4 

1 As the Board's Chairman, one policy area in particular, 

2 I believe, will be central to any future success for the Board 

3 and for integrated waste management in California, is market 

4 development. As the Board's upcoming annual report clearly 

5 states, all the good intentions and great ideas to spur 

6 reduction, reuse, and recycling of waste are for naught if there 

7 are not sufficient markets for secondary materials. 

8 To date, we've done a pretty good job of stimulating 

9 markets. Our programs have spurred the development of new 

10 recycled businesses, created and saved hundreds of jobs, and 

11 account for more than a million-and-a-half tons of waste 

12 diverted annually from landfills for reuse. 

13 In the future, I hope to lead Board efforts in market 

14 development and especially in developing markets for compost. 

15 Because it's a largely untapped market, and because yard waste 

16 is the single largest component of California's waste stream by 

17 any account, developing long-term markets for compost and other 

18 post-consumer materials will be essential to achieving 50 

19 percent. 

20 Again, I want to thank the Committee for its time and 

21 consideration. I will be happy to answer the questions you may 

22 have. 

23 CHAIRMAN LOCKYER: Okay, Senator Petris. 

24 SENATOR PETRIS: I have a mailer here that was sent out 

25 in Senator Sher's district. I'm going to ask if you're familiar 
2 6 with it. Maybe you can tell from the cover. 

27 MR. PENNINGTON: Yes, sir, I am. 

28 SENATOR PETRIS: My information is that research for 



the mailer was done by a company called the Capital Group. Are 
you familiar with that? 

MR. PENNINGTON: Yes, I am. 

SENATOR PETRIS: According to their official records, 
filed in the County of Sacramento and the FPPC, this company's 
comprised of three individuals, one of whom works for the Waste 
Board. 

We're told that the company and the staffer does 
research and writing for Republican candidates and is consulting 
on the Lungren gubernatorial campaign. 

I don't have a problem with that, except if it 
interferes with the work of a staffer working for you. 

Is it true that you've requested that this individual 
be placed on your staff to do research and speech writing? You 
made such a request? 

MR. PENNINGTON: I have not requested it. I have 
looked at the possibility of adding a second staff person to my 
personal staff. The Chairman gets a great deal of 
correspondence. I've been asked to make a lot more of 
appearances, and the workload is greater. 

I have looked into, but have not decided yet whether 
that's an appropriate thing to do; 

This staff person was one who would be in consideration 
for it, at least was. 

I have not made any decisions in terms of that yet. I 
want to look at what adding that position would do to our 
budget. I want to see what it would do to our staff. I'm 
interested that this is not taking a staff person, but it's 



6 

1 really reassignment of a staff person. 

2 But yes, he was under consideration, yes, sir. 

3 SENATOR PETRIS: Well, I suggest to you one other 

4 factor you may want to take into consideration. 

5 If this person we're talking about is the one who wrote 

6 this stuff, you should be concerned about adding immeasureably 
to our blood pressure, starting with mine. I don't speak for 

8 other Members. 

9 MR. PENNINGTON: I might say that I have talked to the 

10 staff person about it, and he has provided me with a letter he 

11 had recused himself from this account, that he was not involved 

12 in it. 

13 And also, there is a San Jose Mercury News 

14 investigation, article, that shows that they did not uncover 

15 this material that was used in that mailer. I don't know where 

16 that material came from, but the article in the Mercury News 

17 indicated that they did not uncover it. 

18 SENATOR PETRIS: The Mercury News called it totally 

19 false. 

20 MR. PENNINGTON: Correct. 

21 SENATOR PETRIS: And the Sacramento Bee said it's full 

22 of lies and distortions. 

2 3 MR. PENNINGTON: Right. It is a very objectionable 

24 piece. I might add that I object to hit pieces, too. I think 

25 there should be a higher level of politics than that. 

2 6 SENATOR PETRIS: You're expressing the hope that he's 

27 not the one applying for the position you had in mind? Is that 

28 what you said? 



MR. PENNINGTON: Uh -- 

SENATOR PETRIS: Maybe I overstated it. 

Withdraw the question, your Honor. 

CHAIRMAN LOCKYER: Did you want to ask anything else, 
Senator, or should I ask other Members? 

SENATOR PETRIS: Maybe I can come back to it. 

CHAIRMAN LOCKYER: Other comments or questions from 
Members . 

I guess the one I would ask you about initially is just 
to reflect on the benefits and maybe nonbenefits of the proposal 
to combine the Integrated Waste Management and Toxic Substances 
Control. 

Have you had a chance to reflect on that? 

MR. PENNINGTON: Well, actually, Senator, I learned 
about it at about the same time you did. To my knowledge — 

CHAIRMAN LOCKYER: From the newspaper. 

MR. PENNINGTON: To my knowledge, what it calls for is 
for the Secretary of Cal-EPA to develop a plan for the '97-98 
budget. To my knowledge, there is no plan developed at this 
point. 

I would certainly hope that any plan that is developed, 
that they would have me participate in. 

I certainly would say that I would not be before you 
today if I didn't believe that the Board has done a good job in 
carrying out its missions, and that it is capable of doing 
that. 

But a decision to merge them, certainly it never hurts 
to look, but that decision is certainly going to be made by the 



8 

1 Governor and the Legislature, and whatever decision is made, I 

2 will faithfully carry out. 

3 CHAIRMAN LOCKYER: If you want to express any opinion 

4 about the merits, or lack thereof, with regard to consolidation, 

5 this is an okay time and place to do that. If you don't care 

6 to, that's okay, too. 

7 MR. PENNINGTON: Thank you, Senator. 

8 CHAIRMAN LOCKYER: Senator Ayala. 

9 SENATOR AYALA: Yes, AB 939. 

10 MR. PENNINGTON: Yes, sir. 

11 SENATOR AYALA: Is that working the way we expected it 

12 to? Is it premature to say it? If it's not working, why isn't 

13 it? 

14 MR. PENNINGTON: No, sir, I think it is working well, 

15 the way it was intended to work. We're on the threshold of 

16 achieving the '95 goal. We think we've reached that. The final 

17 reports will be to us the first of August, but statewide, we 

18 believe that we have diverted by 25 percent, and we have created 

19 a lot of new markets for recycleable materials. 

20 So yes, we feel very comfortable that it is doing what 

21 was intended, and we intend to achieve 50 percent by the year 

22 2000. 

23 SENATOR AYALA: Should wine and liquor bottles be added 

24 to the materials subject to the bottle bill? 

25 MR. PENNINGTON: You know, that is under the purview of 
2 6 the Department of Conservation, and the Division of Recycling. 

27 I'm not sure that, you know, I've really taken a real 

28 strong look at that. 



SENATOR AYALA: It doesn't come under your 
jurisdiction? 

MR. PENNINGTON: No, sir, it does not. It's the 
Department of Conservation and the Division of Recycling. 

SENATOR AYALA: Thank you. 

MR. PENNINGTON: Thank you. 

CHAIRMAN LOCKYER: I guess relevant to the question of 
whether we ought to combine things or not is whether there's a 
value in the independent status of certain commissions. 

I personally think there is benefit in that structure, 
but on occasion, it appears that the practices may eliminate or 
erode the independence of some of the bodies that are at least 
technically called independent. 

The example I would cite, and I don't know if this 
happened during your tenure, and you might reflect on it with 
us, there was a requirement under a bill bye Assemblymember 
Eastin that the Board report on whatever state procurement 
practices were being developed to expand recycled content in 
state purchases. 

As I understand it, the Board had a report, and EPA 
said, you can't issue that report. We insist on a variety of 
changes and amendments. And the Board made the changes. 

It kind of raises questions about how independent are 
they when some other agency is able to do that to them. 

Was that during your time? 

MR. PENNINGTON: No, sir. I don't recall that. 

However, I would say that recently, I sent a letter, a 
joint letter with, in fact, a Senate Member, to all the 



1 departments and agencies suggesting that some of them were not 

2 in compliance and that they needed to be in compliance. 

3 CHAIRMAN LOCKYER: So, you were trying to speed up 

4 that? 

5 MR. PENNINGTON: Yes, sir. 

6 CHAIRMAN LOCKYER: I note that there's a long list of 
supporters in our file, some of whom are present. I don't know 

8 that we need to take testimony, unless there are opponents 

9 present, or people that want to express concerns. 

10 Do we have any in that variety today. 

11 Hearing none, maybe if people want to be acknowledged 

12 as supporters, if you want to just stand so that maybe you'll be 

13 the one that should turn around to see who stands up. 

14 MR. PENNINGTON: Thank you, sir. 

15 They're not all my staff, either. 

16 CHAIRMAN LOCKYER: What's the pleasure of the 

17 Committee? 

18 SENATOR BEVERLY: Move we recommend confirmation. 

19 CHAIRMAN LOCKYER: We have a motion to confirm. Call 

20 the roll. 

21 SECRETARY WEBB: Senator Ayala. Senator Lewis. 

22 SENATOR LEWIS: Aye. 

23 SECRETARY WEBB: Lewis Aye. Senator Petris. 

24 SENATOR PETRIS: Aye. 

25 SECRETARY WEBB: Petris Aye. Senator Beverly. 
2 6 SENATOR BEVERLY: Aye. 

27 SECRETARY WEBB: Beverly Aye. Senator Lockyer. 

28 CHAIRMAN LOCKYER: Aye. 



11 

SECRETARY WEBB: Lockyer Aye. 

CHAIRMAN LOCKYER: Let's leave it on call so Senator 
Ayala can records. 

Thank you, sir. Good luck. 

MR. PENNINGTON: Thank you. Senator. I also would like 
to thank Ms. Michel in all her help in getting through this 
process. 

CHAIRMAN LOCKYER: Just keep trying to do a thorough 
and fair job. 

MR. PENNINGTON: We'll do that, Senator. Thank you. 

CHAIRMAN LOCKYER: Warden Pliler is our next person. I 
don't know if I said that right. Come on up. We'll get you a 
different cup of water. 

Did you want to start with any comments? 

MS. PLILER: Yes, I'd like to thank you, Mr. Chairman 
and Members of the Committee. This is my mother. 

CHAIRMAN LOCKYER: Your mother should take your 
picture. Go ahead. 

MS. PLILER: Thank you, Mr. Chairman, Members of the 
Committee, and Ms. Michel and staff of the Committee. 

I began my career with the Department of Corrections in 
1968 at the California Correctional Center in Susanville. Since 
that time, I've had the opportunity of working at nine different 
institutions in a variety of capacities. I've also been 
assigned as a staff services manager, senior investigator, and 
deputy commissioner for the Board of Prison Terms. 

In these various roles, I have become knowledgeable and 
proficient with regard to dealing with adult felons, from 



12 

1 sentencing to incarceration, program, parole, discharge, and in 

2 some cases, clemency and pardon. 

3 I've been involved in prison supervisory and managerial 

4 roles for over 20 years, and was closely involved in the 

5 activations of three new prisons: California State Prison, 

6 Sacramento County, as the classification and parole 
representative; Avenal State Prison as Associate Warden; and 

8 North Kern State Prison at Delano as Chief Deputy Warden. 

9 My varied experience in state service has served me 

10 well in terms of effective management of prison programs and 

11 budget, and implementing sound custodial, fiscal, and personnel 

12 practices. 

13 I believe that to maintain a safe, secure and humane 

14 institutional environment, the Warden must lead by example. To 

15 help accomplish this goal, I have set policies in place to 

16 maintain open lines of communication between both staff and 

17 inmates, be responsive to concerns, initiate corrective action 

18 when needed, and treat those with whom I have contact with 

19 dignity and respect. 

20 Throughout my career, I feel I have contributed to the 

21 management and development of the Department of Corrections in a 

22 positive fashion. I would like to devote the remainder of my 

23 career toward continued professionalism in the field of 

24 Corrections. 

25 Thank you. 

2 6 CHAIRMAN LOCKYER: How did you adjust to climate change 

27 between North Kern and Susanville? 

28 MS. PLILER: It was difficult, but I'm now very 



13 

proficient with four-wheel-drive vehicles. 

CHAIRMAN LOCKYER: This is always mostly an opportunity 
for us to learn something about the programs and policies, as 
well as the individual that has the responsibility of 
implementing them. 

There's been a lot of controversy about work programs 
for inmates, or educational programs. What have you seen of 
those? What have you learned about them? Are there ways to 
improve them that we ought to know about? 

MS. PLILER: All of the institutions where I've had 
experience, and more specifically this institution, because it 
is a minimum to medium facility for most part, we have 
exhaustive educational and vocational programs. 

I have 25 separate vocational programs in various 
areas, 12 separate educational academic programs. We're heavily 
involved with the literacy support program. We use inmate 
tutors for peer tutoring, and we have about 250 inmates a week 
just involved in that program. 

As the world of technology becomes more advanced, we've 
become involved with the computer age and renovating computers 
for schools. Anything to give — 

CHAIRMAN LOCKYER: Is there a waiting list? 

MS. PLILER: Always. 

CHAIRMAN LOCKYER: How many people? 

MS. PLILER: Right now, for our vocational program, out 
of my population, we have 118 men on the vocational waiting 
list, and 127 men waiting for academic and English as a Second 
Language . 



14 

1 CHAIRMAN LOCKYER: How many are in a program? 

2 MS. PLILER: My population is at almost 5,000, and I 

3 have 3200 in programs. 

4 CHAIRMAN LOCKYER: Thirty- two hundred? 

5 MS. PLILER: Including the camp program. 

6 CHAIRMAN LOCKYER: How many are in camp? 

7 MS. PLILER: 1850, divided into 16 northern camps. 

8 CHAIRMAN LOCKYER: What's your experience been with 

9 overtime costs? Are they significant? 

10 MS. PLILER: Overtime cost can be significant if you 

11 don't monitor it closely. They were escalated, and we've put 

12 some measures in place to restrict that. 

13 CHAIRMAN LOCKYER: What did you do? 

14 MS. PLILER: One of the things that we did, I discussed 

15 with CCPOA methods of bringing down overtime costs, sick call 

16 ins, those types of things. We had correctional officers 

17 calling directly in to the Watch Commander, as opposed to 

18 another officer or sergeant. 

19 We did this for one quarter, and it dramatically 

20 reduced our sick call ins, consequently, our overtime. 

21 We dropped it at the end of the first quarter to see if 

22 we would maintain the same level, and we have. Staff have 

23 worked real hard to bring down the overtime. 

24 We also make extensive use of permanent intermittant 

25 employees at straight time as opposed to paying time-and-a-half 
2 6 to full-time individuals. 

27 CHAIRMAN LOCKYER: Can you quantify it, just sort of a 

28 rough number, as to how much of your personnel expenditures 



15 

might have been overtime before you instituted some of the 
changes? 

MS. PLILER: I had a study done on the last eight 
quarters. 

CHAIRMAN LOCKYER: Okay. 

MS. PLILER: The percentage was running at about seven 
percent of my personnel services budget for overtime. It's now 
down to 4.2 percent, which is significant dollars. 

CHAIRMAN LOCKYER: Other questions from Members at 
all. 

What's been the most difficult problem you've had to 
deal with during your tenure here as Warden? 

MS. PLILER: Mr. Merkle was the previous Warden, and he 
had been there since 1979. He's widely respected, did a 
wonderful job, and I think it was difficult — transition in 
management is always difficult, but it was even more difficult. 
He's a legend in his own time, and fortunately he's still 
available. I consult with him often. 

So that was difficult initially, but in terms of the 
job, probably personnel actions, and dealing with staff who've 
experienced some negative behavior. It's very difficult. 

CHAIRMAN LOCKYER: Do you have any thoughts on the 
efforts to eliminate illegal drugs in the prison setting. 

There are some that suggest visitation should always be 
behind glass, and different ways to address that. What are your 
thoughts about the subject? 

MS. PLILER: Visitation occurring always behind glass 
I'm not sure is the total answer to this problem. I also find 



16 

1 it with a lot of -- 

2 CHAIRMAN LOCKYER: Would that be a part answer or no? 

3 MS. PLILER: With some inmates, I think it may be an 

4 answer, and those can be specifically identified. 

5 As general rule, I would say probably not. It adds to 

6 some inhumanity on the part of individuals who are working and 

7 programming. 

8 I'd like to say, you know, that it never happens, but 

9 realistically it does. It happens everywhere. Drugs come in 

10 sometimes through visits, sometimes through packages, sometimes 

11 even from vendor packages. 

12 We've placed a lot of interdiction programs in place. 

13 We've used canines. We continue to use canines, searches of 

14 packages, searches of mail. You find — you know, you can find 

15 things under stamps, in the seals of envelopes, actually 

16 absorbed straight into a certain type of recycled paper, and you 

17 need to field test it, which we do. 

18 And we also have those inmates who don't want to become 

19 involved in the narcotics trafficking in the institution, who 

20 sometimes let us know that we may want to look certain places, 

21 which we do. More often than not, we find narcotics. 

22 CHAIRMAN LOCKYER: Additional questions. 

23 We don't have opposition in the file. 

24 Let me just ask if there's anyone present who wishes to 

25 express opposition or concerns? If not, I think the Beverly 

26 motion is probably timely. 

27 SENATOR BEVERLY: Move we recommend confirmation. 

28 CHAIRMAN LOCKYER: We have that motion. Call the roll. 



17 



SECRETARY WEBB: Senator Ayala. Senator Lewis. 

SENATOR LEWIS: Aye. 

SECRETARY WEBB: Lewis Aye. Senator Petris. 

SENATOR PETRIS: Aye. 

SECRETARY WEBB: Petris Aye. Senator Beverly. 

SENATOR BEVERLY: Aye. 

SECRETARY WEBB: Beverly Aye. Senator Lockyer. 

CHAIRMAN LOCKYER: Aye. 

SECRETARY WEBB: Lockyer Aye. 

CHAIRMAN LOCKYER: Let's leave it on call for Senator 



Ayala. 



Good luck. 

MS. PLILER: Thank you so much. 

CHAIRMAN LOCKYER: Mr. Stoker, ALRB. Do you want to 
start with any comments? 

MR. STOKER: Thank you, Mr. Chairman. 

First I'd like to thank you and the honorable board 
members, Committee Members, for inviting me here today. I'll 
keep my comments very, very brief. 

I would like to share with the Committee some of the 
things that I think I've brought to the agency that provides a 
positive, perhaps different perspective that the agency had in 
the past, but I think has created for a more open agency in 
working with the interested parties. 

The first thing that has been a strong commitment of 
mine, it's something I was always committed to in my days as a 
Supervisor from Santa Barbara County, is being open, accessible 
to everybody. I think the reputation I've earned, hopefully, 



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18 

amongst all interested parties that deal with the Agricultural 
Labor Relations Board is that they know that my door is always 
open; I will listen to anybody, and that's something that I 
think, perhaps, that agency hasn't been as open and available to 
everybody in the past as it could have and should have. 

There's certainly times that you have legal conflicts 
of interest, that you can't discuss things in an ex parte way, 
but if there is not the restraint of ex parte communications, I 
return every -- I'll return phone calls, no matter who it is. 
And if I can't address or speak to something, I'll let them know 
that. And I think that's something that's opened up the chain 
of dialogue between the Board as an institution and interested 
parties that deal with the ALRB. 

The second area, that I think is something that is a 
very positive aspect that I've been working hard towards, is 
assuring that the General Counsel's side of the agency and the 
Board's side of the agency work hand in hand. 

I think in the past, perhaps under the same — the same 
reasons of legal conflict of interest, the two sides have used 
that, I don't want to say as an excuse, but it has been used as 
a reason for not having what I would call the best of 
communications . 

Again, my philosophy is that any time the General 
Counsel's side and the Board's side can be talking to each 
other, we should be. And I think as a result of that, that the 
dialogue's been much greater than it's been in the past. We're 
able to work out a lot of problems that, perhaps, wouldn't have 
been worked out. 



19 

All too often when you talk about things, whether it's 
how to get field inspectors out in the Salinas office, or 
whether it's dealing with resources and where they should be 
spent up here in Sacramento on the administrative side, when 
we're talking together, we're able to solve the problems much 
easier. 

And I think credit deserves to go out to our General 
Counsel that was appointed about a month after me, Paul 
Richardson. He -ttarve comes from county government. He was a 
district attorney in Placer County. I think he probably has a 
lot of the same kind of prospectives that I have in terms of 
that openness and accessibility, which is why we're working so 
well together. 

Finally, the last area that I would like to indicate to 
the Committee is something that I think is somewhat of a new 
approach, potentially, or a new perspective, and it's something 
I'm very, very strongly committed to, is seeing the agency 
become more of a facilitator in promulgating settlements in 
bilateral way. 

In the past, the agency has stayed away from involving 
themselves. Again, there's legal things that we cannot involve 
ourselves in because we ultimately may have to be the decider of 
the issue that comes before us. But on the other hand, there's 
a lot of things that we can make ourselves available to help 
parties to reach a bilateral settlement. 

I frankly, within the agency, I've let it be known that 
maybe one of the best ways to measure our success in years to 
come is not necessarily how many elections there have been in an 



20 

1 annual year, but how many settlements that parties bilaterally 

2 have come to a mutual consensus. 

3 I'll throw out a for instance, many of you probably 

4 have read recently of discussions involving the United Farm 

5 Workers and Bruce Church. Some newspaper accounts erroneously 

6 reported that there was a settlement in that case. There 
wasn't, but are there are discussions and those parties now from 

8 my myself, personally, on the Board's side up here in 

9 Sacramento, and from the regional offices that are involved, in 

10 this case it's El Centro, that our agency will do everything 

11 within the parameters of the law to help the parties come to a 

12 bilateral settlement, and to basically make sure — our role is 

13 that if settlement comes to us that the parties agree to, as 

14 long as it meets the spirit of the law that the Legislature has 

15 passed, that we encourage bilateral settlements. 

16 So, I think you're going to see a lot more of that in 

17 the months and years to come. We've let that word get out. 

18 Something that I discussed, and I intend to be looking 

19 at and exploring in workshops probably next fall, is potentially 

20 training administrative law judges in settlement judge courses. 

21 That is something the NLRB is currently looking at, so that 

22 those ALJs can take that kind of what I would call a 

23 constructive, positive role in helping parties to reach a 

24 bilateral agreement. 

25 I just wanted to share some of the things that I'd like 
2 6 to think are perspectives I've brought to the agency since I've 
27 been there. It's been — I've been proud to serve. I am 

2 8 hopeful of continuing with the perspectives that I have 



21 

discussed with you today, and I would look forward to working 
with this agency in the years to come and finish up my term. 

I want to thank you again for allowing me to come 
before you this afternoon. If you have any questions, I'd be 
more than happy to answer them at this time. 

CHAIRMAN LOCKYER: How does this work compared to being 
on the Board of Supervisors? 

MR. STOKER: Well, I don't have to worry about pot 
holes in the street, and why the sheriff didn't respond on 
time. 

One of the things that I've gone to great lengths to 
make sure this Board does not do is become policy makers. One 
of the first things I had before me when I came on the Board was 
some rule making issues, of which the Governor's Office, many of 
the union groups, Members of the Legislature, and many of the 
growers had all trouble with some of the things that were being 
potentially promulgated in terms of the rule making, and the 
argument was, it was going beyond really what our discretion, 
and was entering into an area without a policy. 

I think that's the biggest difference, Mr. Chairman. I 
enjoyed my role as a policy maker at a local level. I'm 
enjoying my role in a quasi-judicial level, of which I'm one of 
those that believe in exercising judicial restraint, and it's up 
to the Legislature to write the law and tell us what the law is. 
And for us, when we issue our Board rulings, to enforce that law. 

CHAIRMAN LOCKYER: So that general controversy, of 
trying to do by regulation what wasn't in the law, is all behind 
us now, do you think? 



22 

1 MR. STOKER: I would like — you always have, I 

2 imagine/ subject to interpretation, what exactly — sometimes 

3 there's clear areas of the law that I think is very clear. It's 

4 something that's not subject to discretion, and I think that's 

5 behind it. 

6 I think areas that are always subject to discretion, 
reasonable people can disagree. And I'm one of those that 

8 will -- in fact, many of the Board rulings I've authored, I 

9 have no problem saying that this is something that's up to the 

10 Legislature to decide. If people want to see changes, that's 

11 something the Legislature needs to address, but it's not 

12 appropriate for the Board to deal with that, either in rule 

13 making or by our authority by issuing Board decisions. 

14 CHAIRMAN LOCKYER: I guess one of the issues that may 

15 have been resolved by the Supreme Court, I believe, there was an 

16 action brought against, I assume, the Farm Workers Union — it 

17 was a union — relative to the grape boycott. And there was one 

18 initial determination which was reversed eventually on appeal, 

19 and the Supreme Court refused to hear that matter, which I 

20 suppose means that's settled for the time. 

21 MR. STOKER: Mr. Chairman, I think you're referring to 

22 the Table Grape Commission case. 

23 CHAIRMAN LOCKYER: Yes. 

24 MR. STOKER: That's an issue — two issues basically 

25 where the Board found the secondary boycott, and also found for 
2 6 damages. 

27 There was an issue in regards to whether the Table 

2 8 Grape Commission had standing to bring that case, and the court 



23 

basically said no — the Court of Appeals said no. The Supreme 
Court did not take the case up on review. 

I would imagine the only area now — the jurisdictional 
issues and the standing issue was clear. The only area that I 
could see that is subject to debate and discussion is whether or 
not the Board potentially has the ability to award damages in a 
case like this. Based on that case, clearly no, because the 
Table Grape Commission didn't have the standing, so the damages 
were therefore not appropriate. 

I think that probably the attorneys in the interested 
communities would clearly read the Court of Appeal cases two 
ways in regards to whether it limits the ability of the Board 
altogether to award damages, or whether it was limited to that 
one case as a result of the standing case, Mr. Chairman. 

CHAIRMAN LOCKYER: Finally, there's a question as to 
the appropriateness or willingness to enjoin illegal activities 
pending some adequate investigation. 

I guess this came up a few years ago, where there was a 
table grape grower that basically discharged all of the 
employees during an organizing election period. The ALRB 
actually sought an injunction to freeze the situation until the 
election was conducted, and a decision made about the 
appropriateness or legality of the firing. 

Does that ring any bells? 

MR. STOKER: Mr. Chairman, it really doesn't. That was 
before my time. 

The one thing, as you know, that we have under 
California law that the National Labor Relations Board doesn't 



24 

1 under the National Labor Relations Act is the make whole 

2 remedy. So, in theory, if there's an unfair labor practice 

3 that's committed by an employer, in theory there's monetary 

4 damages that are out there, in theory, to make an individual 

5 whole if somebody commits an unfair labor practice under the 

6 Act. 

7 CHAIRMAN LOCKYER: This was a secondary boycott 

8 dispute, which, of course, is also a difference. 

9 MR. STOKER: Absolutely. 

10 CHAIRMAN LOCKYER: Not being part of the National Labor 

11 Board rules, that's become a legal tactic, whether it's wise or 

12 not is a different matter. 

13 Are there Members of the Committee that wish to pose 

14 any questions? Yes, Senator. 

15 SENATOR PETRIS: I have one that's pretty much along 

16 the same subject, where you have a real bad case, at least from 

17 my viewpoint, of discrimination by seeking affirmative 

18 injunction in the local superior court on the part of the 

19 employer. 

20 For example, if there's an organizing campaign under 

21 way, let's say the strawberry pickers have an organizing 

22 campaign, and the owner fires the whole crew because they 

23 supported the efforts to unionize. 

24 Now, in order to enforce the law, an immediate 

25 injunction would be required, ordering the employer to rehire, 
2 6 reinstate those workers — that's the present law, as I 

27 understand it. Pending the resolution of the charges by the 

28 ALRB, they'd be required to reinstate those workers that had 



25 

been fired solely because of participation in an union 
organizing activity. 

Now, I'm concerned, because you can see the impact of 
that is to put a chill on any workers who might be leaning 
toward becoming part of the union membership drive. 

Now, would you support such an injunction, where it's 
shown to be clearly illegal? 

MR. STOKER: Well, Senator — 

SENATOR PETRIS: Not the injunction, but the 
activity. 

MR. STOKER: My concern is, first off, I'm an attorney, 
but I had no labor background. This is an area that I have not 
dealt with at all. 

I'll be real blunt with all Members of the Committee 
and the Chair, as I would in any decision, I'd be reading the 
decisions. I'd be sitting, talking with my Board counsel, and 
making a decision based on what the law is. 

What I'm concerned about is, the issues that we have 
come before us, is where the growers have gone in and sought 
writ of mandates in superior court, of which we have, and myself 
leading that charge, have vehemently opposed growers using the 
local courts, based on, under the law, the ALRB has the 
exclusive jurisdiction. 

Just off the top of my head here, I'm somewhat 
concerned in terms of inviting local courts to become involved 
in regards to dispute resolution, whether it's writs or whether 
it's injunctions. And saying on one hand, it's appropriate, 
and, on the other hand, saying it's inappropriate. 



26 

1 I have not dealt with those issues. I don't know if 

2 it's the kind of disputes that are arising out there are 

3 different, but we have not had those kind of disputes come 

4 before us. 

5 I'm just really concerned/ on a very, very technical 

6 legal issue, thinking it out here, without reading the cases, 

7 getting the advice of counsel. 

8 But I have been consistent in fighting for the ALRB's 

9 jurisdiction being upheld, knowing that if the superior 

10 courts — such as right now, we have a case that's on appeal, a 

11 case involving Gallo, that they involved the local court, and 

12 got the court to issue a writ that we're now taking up to the 

13 Court of Appeals, saying that's wrong. Because traditionally, 

14 the way to deal with resolving, or taking up on appeal ALRB 

15 matters, would be to go to the Court of Appeal, would be the 

16 appropriate next judicial level based on how the statute's 

17 designed. 

18 SENATOR PETRIS: I appreciate that. I raise it in the 

19 big over-all context of the law relating to the right to 

20 organize, and the resistance, which is understandable, by 

21 employers. But it shouldn't go to the point where they're 

22 violating the law. 

23 In a lot of these cases, history has shown that the 

24 employer knows he's going to lose in court, but he'd much prefer 

25 to pay the fine if he's successful in discouraging workers from 

26 becoming part of the union movement. That's whole purpose, is 

27 to really put a chill on them. 

2 8 Hopefully, you never will run into that. Maybe that 



27 



won't happen. 

MR. STOKER: If I do, I can promise you, I will 
thoroughly research it and spend a lot of time with my Board 
counsel in arriving at a conclusion. 

CHAIRMAN LOCKYER: You don't have authority, the Board, 
that is, to issue an injunction; right? 

MR. STOKER: Not that I'm aware, Mr. Chairman. 

CHAIRMAN LOCKYER: You'd have to go a local court — 

MR. STOKER: Right. 

CHAIRMAN LOCKYER: — to get that. 

MR. STOKER: Right. 

CHAIRMAN LOCKYER: And so, I understand your general 
thought that disputes ought to come before the ALRB. That makes 
sense, except that would be a circumstance in which you'd have 
to go and use the traditional — 

MR. STOKER: Absolutely. 

CHAIRMAN LOCKYER: — system to seek your own 
enforcement. 

Is there anyone present who wants to raise any 
questions. 

Let me ask, I guess the budget is shrinking. In the 
largest point, there were almost 300 employees? 

MR. STOKER: Down to about 75 now, Mr. Chair. 

CHAIRMAN LOCKYER: So, it's down substantially. 

MR. STOKER: To 70, actually. 

CHAIRMAN LOCKYER: Still plenty of work to do there? 

MR. STOKER: There's still plenty of work. In fact, if 
you look, I think, in 1994, with our five-year averages I took 



28 

1 before the Senate Budget Committee and the Assembly Budget 

2 Committee, basically we're at about the same amount of workload 

3 that we've had over the last five years, with the only exception 

4 being in 1994, there was blimp upwards in terms of cases 

5 processed. 

6 The things that I think do not get enough publicity, 
that shows the resources, though being used in an efficient way, 

8 and in a way of prioritizing, is, not withstanding reduction of 

9 our budget from a peak around $9 million to almost — and almost 

10 300 employees, to just below $3 million and 70 employees. We've 

11 gone from the amount of time to process an election, from the 

12 vote to certification decision, from about 250 days average, to 

13 now just over 41 days. 

14 I think all the parties would say that — that's 

15 something I didn't mention in my comments. I made it known the 

16 first day I came in, there had been an election that had been 

17 pending for four or five months. I let it be known, elections 

18 are the top priority. We had that out in 13 days. 

19 So, we have the same amount of workload that we've 

20 really had over the last five years. I think when you look at 

21 this added dimension that you can't even track in terms of, we 

22 are putting a lot of resources from the Board's side and the 

23 General Counsel's side towards helping parties get to a 

24 settlement. That takes resources. 

25 And I think you'll see a lot of more of that time being 

26 spent, that obviously, if we're able to get a settlement, a 

27 bilateral settlement, that will ultimately diminish, you could 

28 argue, the amount of time we would have traditionally spent 



29 

dealing with cases going all the way up to Board hearings. 

And I think finally, I'm one of those that never like 
to speculate on futures, but I think if you look to the grower 
community, if you look to organized labor, in particular the 
United Farm Workers, who has the largest presence of any union 
that deals with the Agricultural Labor Relations Board, you've 
probably read many of the articles in the Wall Street Journal , 
USA Today , the Los Angeles Times , and the amount of elections 
that the UFW has been successful. 

Arturo Rodriguez is bringing, I think, a different kind 
of approach. That is, that he is listening to the other side, 
to what the other side has to say. I think the other side has 
moderated their approach. Maybe it's the evolution of the times 
in this area that you have growers that are more willing to sit 
down and negotiate than they, perhaps, would have been in the 
past. You have United Farm Workers and other union groups that 
are more willing to potentially look at the halfway point 
between how do we get there. 

I think the fact that the settlement that I mentioned 
earlier, Bruce Church and the United Farm Workers, I mean, 
whether we get there or not, I think just the fact that the 
parties are so close maybe provides a perspective in terms of 
how many of the parties have come together in a more moderate 
way. 

So, I think you're going to see a lot more activity in 
the next few months and years to come in regards to the unions 
working with the growers in California. 

CHAIRMAN LOCKYER: Would that suggest some at least 



30 

1 tentative -- I don't want to lead you too much — what's your 

2 thought as to integrating the two or more boards, PERB and Ag? 

3 Any preliminary recommendations? 

4 MR. STOKER: Well, I come from a background, I was 

5 known as a supervisor that did a great deal of downsizing and 

6 consolidating. And I'm one of those that believe if 

7 consolidating makes sense, consolidate. 

8 Sometimes just by consolidating, though, you can cost 

9 more money in doing that. I think that's the important thing to 

10 look at. 

11 My sense is with PERB, it goes back to listening to all 

12 the parties. When all the parties, from organized labor to the 

13 growers, are saying, it doesn't make sense to put the 

14 agricultural labor matters before a public employee board, 

15 whether it's perception or not, the perception is — 

16 CHAIRMAN LOCKYER: More urban? 

17 MR. STOKER: Absolutely. And I think, back to my 

18 perspective, the policy is your call. The way I look at it, if 

19 you're going to have Agricultural Labor Relations Act, the 

20 policy is a determination, if you're going to have an Act or not 

21 have an Act, if you're going to have an Act, somebody is going 

22 to have to then administer the Act and enforce the Act, whether 

23 it's the Attorney General's Office, whether it's the Department 

24 of Industrial Review, whether it's PERB, whether it's the ALRB. 

25 And I think as long as somebody is charged with having 
2 6 to implement that Act, what you have is an entity that, in a 

27 neutral, objective way, understands agricultural, and the 

28 agricultural issues aren't going to get confused with other 



31 

issues that don't pertain specifically to agriculture as it's 
enumerated in Agricultural Labor Relations Act. 

I think what you would find is, ultimately, whoever you 
would transfer this authority to, and whoever you transfer it 
to, requests the additional resources to administer and enforce 
that act, it's going to cost as much or greater, keeping in 
mind, from nine million to three million, a lot of the costs are 
not — most of them aren't in Sacramento. They're in the 
regional offices that have to go out and investigate, and go 
through and review the charges, and then dismiss them or pursue 
them. And pursuing them starts the process. It ultimately can 
lead to Sacramento before the Board. 

Being a person known, with my background, for saying 
always consolidate when you can make money and do it as 
efficiently, I don't believe anybody out there — and I'm not 
trying to toot my own horn, if I believed it, I'd say in a 
minute, do it, get rid of my job position tomorrow - — I don't 
think anybody out there can do it as efficiently and effectively 
as the Agricultural Labor Relations Board is currently. 

CHAIRMAN LOCKYER: Okay, Senator Ayala. 

SENATOR AYALA: You have a five-member Board, with two 
vacancies. That leaves you with three, a bare quorum. You 
don't have much flexibility, do you. 

MR. STOKER. Not only that, the Governor and to the 
Legislature — 

CHAIRMAN LOCKYER: Do the three seem to agree? 

MR. STOKER: No, we disagree. And we have — one of 
the things I brought is, I think there was a tendency to try to 



32 

1 come to consensus as much as possible. I've said, we need to 

2 work, but there's nothing wrong with having footnotes, letting 

3 parties read different perspectives of Board members. 

4 But I guess, if the question was asked to me, are the 

5 three of us able to get the work done? Yes, we are. Could 

6 there be a time that it would be very, very difficult with three 

7 members? Definitely. 

8 SENATOR AYALA: You have three members agreeing yes and 

9 no all the time? 

10 MR. STOKER: We have three members that clearly have 

11 different perspectives, and I would say the three cases we're 

12 trying to get out as we speak, probably there'll be a two-one 

13 ruling, at least on aspects of the Board case. 

14 But we've been able to get the board rulings out. 

15 Often, as I understand, there were times when there were 

16 five-member boards, and all five members didn't participate. 

17 They would designate three people to participate. 

18 So, I'm one of those, if they want to send me two more 

19 Board members, we will, five Board members meet, and we will do 

20 our statutory duty. 

21 I guess from my county supervisor days, I've learned to 

22 limit — learned to respond with what we have, and you have 

23 three Board members currently, that we will continue responding 

24 as we have. I have full faith that the three of us are three 

25 Board members that understand this area of the law and are 
2 6 committed — that's the key, committed — to doing their 

27 statutory duty, can do it. 

28 CHAIRMAN LOCKYER: Other questions? The Beverly 



33 

motion. 

SENATOR BEVERLY: Move we recommend confirmation. 

CHAIRMAN LOCKYER: All right, let's call the roll. 

SECRETARY WEBB: Senator Ayala. 

SENATOR AYALA: Aye. 

SECRETARY WEBB: Ayala Aye. Senator Lewis. 

SENATOR LEWIS: Aye. 

SECRETARY WEBB: Lewis Aye. Senator Petris. 

SENATOR PETRIS: Aye. 

SECRETARY WEBB: Petris Aye. Senator Beverly. 

SENATOR BEVERLY: Aye. 

SECRETARY WEBB: Beverly Aye. Senator Lockyer. 

CHAIRMAN LOCKYER: Aye. 

SECRETARY WEBB: Lockyer Aye. Five to zero. 

MR. STOKER: Thank you, Mr. Chairman, and thank you, 
Members of the Committee. 

CHAIRMAN LOCKYER: Senator Ayala, we have the prior two 
on call, 4-0. I don't know if you would wish to have us list 
the roll, or if you want to add you on to those two. 

SENATOR AYALA: Go ahead. 

SECRETARY WEBB: Ayala aye on both, 5-0 on both. 

CHAIRMAN LOCKYER: Mr. Stamison, good afternoon. 

MR. STAMISON: Good afternoon, Senator, Members. 

CHAIRMAN LOCKYER: Do you know anything new since the 
last time we spoke, or are you here to respond to some of our 
new questions, or what do you want to do here? 

MR. STAMISON: It's been an exciting week. Someone 
asked me how I was on holding up, and I said, well, I've been 



34 

1 tackled by Dick Butkus, I've had back surgery, knee surgery, 

2 couple broken bones, a concussion or two. But this ranks right 

3 up there, one of life's meaningful experiences. 

4 I'm glad to be here before you. We have discussed a 

5 major issue that was brought up by you, Mr. Chairman, and some 

6 of the other Members, regarding MBE/WBE/DVBE provisions on 3307, 
and we've addressed those. And the bill will be heard tomorrow, 

8 and those provisions will be deleted. 

9 CHAIRMAN LOCKYER: I've heard that, and I think that's 

10 a sensible course. That issue can always come up in other 

11 contexts. 

12 MR. STAMISON: That's right. There's just a lot of 

13 good stuff in 3307, and we didn't want to jeopardize that. I 

14 think we had a consensus that procurement reform's time has 

15 come. 

16 CHAIRMAN LOCKYER: Could you comment for us today on 

17 the Governor's proposal to privatize and out source various 

18 functions in state government? And if there are any specific 

19 responsibilities that your department would have to undertake 

20 that effort? 

21 MR. STAMISON: I could. 

22 We — I think the newspapers are quick to jump on the 

23 word privatize. 

24 What the Governor is looking for is to have a 

25 competitive California government. And that could mean a lot of 

26 things. Privatization is just one tool in that tool box. 

27 He's not an ideologue on privatization, neither am I. 

28 It does make sense in some areas, and in other areas it 



35 

doesn't. 

In my last private sector job, I traveled the world, 
putting together public-private partnerships for commercial 
airport development. Some airports just weren't candidates and 
others were. 

I think every case, on a case buy case basis, will be 
considered. 

CHAIRMAN LOCKYER: Have you seen anything yet which 
tentatively makes management and fiscal sense within your 
department? 

MR. STAMISON: Well, I have a little bit of a bias. I 
came into the department having started up two small 
telecommunications companies. And I must say, I came in asking 
the question, why is the state in the telephone business? And 
I'm still asking that question. 

We brought in a very, very appropriate and very well 
thought of consultant that has done some very good work. We're 
embarking on some of the things they've said right now, and 
we're still going to ask that question. 

And we'll probably test the marketplace, Senator, on 
Telecom. That comes to my mind. 

CHAIRMAN LOCKYER: We've kind of wondered the same 
thing from time to time when we look at the costs associated 
with some of them, Cal Net and so on. 

Well, I have what seems to be about an 80-page 
document. It's a little less than that, eight maybe, from 
Senator Alquist. 

Have you had an opportunity to review any of his 



36 

1 questions? 

2 MR. STAMISON: Senator Alquist, no, no. 

3 CHAIRMAN LOCKYER: Well, I'm reluctant to surprise you 

4 with it, but they're probably ones you know. I was trying to 

5 sort of sift through them. 

6 I'll give you that, and maybe, when you have an 
opportunity, since this will come up on the Floor, if not 

8 sooner, you can keep that one. You may want to respond 

9 specifically to Senator Alquist about some of the areas of 

10 interest that he has. 

11 MR. STAMISON: Certainly. 

12 CHAIRMAN LOCKYER: A couple that he mentions, one was 

13 that I had just asked you. 

14 Another is, if there are changes in the state 

15 construction and leasing process which you would contemplate, 

16 what are those? Would the Legislature's role change in any way? 

17 MR. STAMISON: Changes in the process, or is he talking 

18 specifically, perhaps, regarding the Sacramento Capital Plan? 

19 CHAIRMAN LOCKYER: Part of his comment is about the 

20 Sacramento Capital Plan, yes, for the Capital area. 

21 MR. STAMISON: In that regard, we hope to submit, from 

22 a departmental standpoint, to the Governor next month a plan. 

23 We have been asked — I think the original legislation was 1977, 

24 and then the Governor's executive order in 1993 that DGS is 

25 required to come up with a plan. With the help of the ULI 
2 6 study, we hope to have a very viable plan on the use of 

27 property. 

28 CHAIRMAN LOCKYER: When you make changes in the plan 



37 

like that, is that subject to legislative review? Do you 
recall? 

MR. STAMISON: In the plan, I think we have some pretty 
broad powers, but it's always been prudent for us to discuss 
with the Legislature the action we're taking. 

On this plan, on the Capital Plan, for example, we will 
be doing that. 

CHAIRMAN LOCKYER: I think that question gets asked 
about eight different ways here. 

MR. STAMISON: Duly noted. 

CHAIRMAN LOCKYER: Your response may be sufficient as a 
generic matter. Maybe Senator Alquist or others would want to 
ask more specific points. 

MR. STAMISON: More than happy to work with the 
Senator. 

CHAIRMAN LOCKYER: Are there other questions? Yes, 
Senator Ayala? 

SENATOR AYALA: Mr. Stamison, the SEIU has a problem, I 
understand, with the Board of Equalization building on N Street. 
Has that been resolved, the problem with the janitorial services 
subcontractor? 

MR. STAMISON: Some of that was touched upon last week, 
Senator. Just before I walked in — pardon me — five minutes 
after I sat down, I understand there's a letter protesting my 
confirmation from SEIU. 

I don't have a copy of it, but I think it's regarding 
the Board of Equalization. 

I want to say today that DGS, Senator Lockyer asked 



38 

1 last week if we had authority to cancel the contract. We do 

2 have the authority to cancel the contract without cause on a 

3 60-day notice if the vendor is considered disreputable. 

4 However, at this point, we've received nothing but 

5 allegations. The contract was awarded on a competitive basis 

6 under law. We received a lot of information from SEIU, in fact, 
my Chief Deputy, Steve Olsen, has met with them on more than one 

8 occasion. 

9 We've also received a lot of information from Somers 

10 and Company. 

11 The NLRB is gathering information on the case and will 

12 be conducting hearings in June. Originally, they were scheduled 

13 for May, I think May 17th. They will now be in June, early part 

14 of June. 

15 The issues are of an extremely complex nature. And 

16 quite honestly, we are not competent at this time to make these 

17 decisions, because there's not enough sufficient evidence to 

18 indicate that Compass is in breach of contract. 

19 We will wait for the NLRB's findings. I feel strongly 

20 it's the right thing to do at this time. It is due process. 

21 SENATOR AYALA: You've had a chance to discuss this 

22 issue with the SEIU people. 

23 MR. STAMISON: I have not personally, but Chief Deputy 

24 Olsen has. He's in the room today, if you would like him to 

25 make a comment, I can ask him to come up. 

26 SENATOR AYALA: I'd like to hear what the end result 

27 was of that conversation you had? 

28 MR. STAMISON: Steve, please come up. 



39 

CHAIRMAN LOCKYER: Are there other people who wish to 
comment or who are knowledgeable about this issue? 
Mr. Davenport's here. 

I think I may have discouraged someone from Somers from 
coming in. I was called on Friday by one of the gentlemen 
involved in that business, and I said, incorrectly. Gee, I don't 
think this issue is coming up again. You don't have to come in 
and comment. So, I feel a little bad that I gave him that 
advice. 

SENATOR AYALA: I'd just like to have the end result of 
the conversation you had with the representatives of SEIU. 

MR. OLSEN: Senator Ayala, Steve Olsen. I'm the Chief 
Deputy at the Department of General Services. 

I've met on two occasions with representatives of 
SEIU. One occasion, week before last, the last occasion, I 
believe, was last Thursday or Friday. 

We've taken this matter very, very seriously. We've 
taken a look at the contracts in question, which there are two. 
There's our contract with Compass, as well as Compass' contract 
with Somers. 

We have examined carefully the Legislative Counsel 
opinion that was requested by Senator Lockyer on this matter. 

I've had telephone conversations with the owner of 
Somers as well as other representatives of Somers. 

I have yet to make contact with Compass. I've been 
trading calls with Compass to understand exactly where they 
stand on this particular issue. 

Clearly, the allegations that have been made by SEIU 



40 

1 with respect to Somers' conduct/ they're very serious 

2 allegations. We take them seriously. 

3 We've also heard a lot of allegations on the other side 

4 with respect to the activities by SEIU as well as the Department 

5 of Labor and the NLRB. 

6 To be quite honest with you, it's difficult for us, 
given our job and our expertise, really to sort all of this out 

8 at this point. This is a very complex matter. It's one that 

9 we're not normally tasked in terms of rendering judgments or 

10 making decisions about. 

11 I think our approach, as Director Stamison has 

12 indicated, our approach on this issue would be to see first, of 

13 all, whether or not the NLRB might make some findings in this 

14 area. 

15 That does not necessarily mean that we would, in each 

16 and every case, wait until that happened. If we had some 

17 evidence that came in prior to that time that there was really 

18 seriously something afoot, and that this was a situation that 

19 represented a material breach of a contract with Compass, we 

20 would move to act in that particular case. 

21 I think what we are hoping for is that the NLRB will 

22 give us some findings that are grounded in a factual 

23 determination and in law. We would take look at the nature of 

24 those findings, and we would talk to Compass and Somers and see 

25 if they could address those issues. And if they couldn't, we 

26 certainly would consider that they could be in breach of the 

27 contract with the state. 

28 As the Director indicated, there really is no legal 



41 

impediment that is standing in our way. We do have a 60-day 
cancellation clause without cause, and that certainly could be 
exercised. 

From our standpoint, we have a situation that is 
difficult to sort out, and since these were contracts that were 
bid by the state on a competitive basis, I think our conclusion 
is that we have a duty to base actions on the facts rather than 
something that is based on allegations that are made in the heat 
of the moment. 

That's our feeling as to where things are right now. 

CHAIRMAN LOCKYER: Mr. 01 sen, what I don't understand 
is, why do you think you have some responsibility to review 
what determinations that have been rendered by the Department of 
Labor or NLRB. 

They've already cited this subcontractor. Are you 
suggesting that you can't rely on their determination. 

You said there's been charges levied by the other side 
at DOL and NLRB. So what? What are the charges that have any 
relevance that they can raise against DOL? 

MR. OLSEN: Senator Lockyer, my understanding is that 
there have been some citations made. The story we hear from the 
other side is that they are, in essence, protesting those 
particular findings or denying that that is the case. And this 
is a situation — 

CHAIRMAN LOCKYER: How did they protest? 

MR. OLSEN: I do not know, Senator. I do not know 
enough about this process. 

CHAIRMAN LOCKYER: When DOL cites them twice now in 



42 

1 five years for violating wage, and minimum wage and overtime 

2 laws, I mean, isn't that relevant? 

3 MR. OLSEN: It certainly is. What I can't tell you — 

4 CHAIRMAN LOCKYER: There are other new charges, and law 

5 suits, and so on, and the record reflects that. I understand 

6 how those are maybe not settled matters, and you wouldn't want 

7 to proceed based on just an accusation. 

8 MR. OLSEN: Senator Lockyer, the other information we 

9 are attempting to sort through right now with respect to this 

10 matter, and this is information that came to us just today, via 

11 a copy of a letter from Board of Equalization member, Johan 

12 Klehs, to Compass. 

13 I have yet to verify Compass' side of the story on this 

14 particular issue, but Mr. Klehs' letter suggests that Compass 

15 has opined if there are findings that are made in the next round 

16 of hearings by the NLRB, then they would take an action to 

17 terminate their agreement with Somers. 

18 That certainly would put the matter at rest. 

19 I don't mean to put this at Compass' doorstep. This is 

20 not to say that the Department of General Services doesn't have 

21 responsibility for reviewing these matters. We certainly do, 

22 and as I have told Mr. Davenport on both occasions that I met 

23 with him, we are not taking the position that Compass' and 

24 Somers' sole duty to the state are simply to keep the buildings 

25 clean. They obviously have a responsibility to do that in a 

26 manner that is lawful. And we are looking for contractors and 

27 subcontractors who will conduct their business in a lawful way. 

28 I think that this is a situation of simple professional 



43 

judgment that we are taking a look at so many conflicting 
allegations right now that we simply don't have the facts at our 
disposal to make a considered judgment, and when we do, we will 
make a considered judgment. 

CHAIRMAN LOCKYER: Mr. Davenport, did you want to add 
something here quickly? 

MR. DAVENPORT: Mr. Chairman and Members, first of all, 
I agree entirely with Mr. Olsen's description of this. Mr. 
Stamison is not known to me, but I've known Mr. Olsen 
professionally for nearly a decade, and I feel like I'm in the 
hands of a competent professional. 

I think we do have a basic disagreement, first of all, 
as to the merit of these allegations and to the degree of 
finality that is already there. Some of these issues, in fact, 
have been settled, and then the new allegations are that — not 
by us, but by the National Labor Relations Board — is that the 
party in question, Somers, has violated the terms of the 
settlement, which is to cease and desist, for instance, 
supporting a company union, illegally formed and continuing do 
conduct dues. 

I think the real culprit here, if I were to say one, is 
really Compass. Compass has the authority here to make this 
decision on its own, and to decide on its own what — whether 
it is living up to its contract. I think it's unfortunate that 
both Mr. Stamison and the subcontractor, frankly, have been 
drawn into this, when our view is that Compass could have made 
the right decision, and none of this would be occurring. 

I think the fundamental reason that we're in opposition 



44 

1 today, whereas, we were neutral before, is that we didn't — I 

2 didn't get the feeling that I was going to get anything quicker 

3 here than I had gotten for the first year of this ongoing saga 

4 by going through channels. I just didn't know whether there was 

5 going to be the kind of finality that I thought Mr. Stamison had 

6 the discretion to exercise. 

7 And I believe that the facts are clearer, obviously, 

8 than he does. And I believe that if I were in his position, I 

9 could make this decision based on the facts in front of me. 

10 CHAIRMAN LOCKYER: In 1999, you might be. 

11 MR. DAVENPORT: I understand. 

12 MR. OLSEN: As I told Mr. Davenport, Senator Lockyer, I 

13 think that, actually, if Mr. Davenport were in our shoes, he 

14 wouldn't have the liberty to contract out these services, in all 

15 likelihood, so, it would be a moot issue. 

16 I appreciate Mr. Davenport's — 

17 CHAIRMAN LOCKYER: Do you have any sense of how long it 

18 may take to properly investigate and resolve the matter? 

19 MR. OLSEN: I think if you focus entirely on the legal 

20 process that is potentially available, you could almost get into 

21 an endless cycle of debate and appeal. Clearly, that's not a 

22 satisfactory result either for SEIU or any of the other parties 

23 to this particular dispute. 

24 I think that we can tell you in all honestly, it would 

25 not be our intent simply to say, well, we're going to wait until 

26 the next round of appeals before we reach any conclusions about 

27 this. 

2 8 I am aware that SEIU has had some frustrations going 



45 

through channels, as Mr. Davenport has indicated, but in all 
honesty, I have known Allen for ten years. He knows me. I've 
been extremely responsive to the requests that he initiated. 
I'm more than happy to sit down and meet with him on a regular 
basis to review the status of this. Clearly, if — 

CHAIRMAN LOCKYER: Review regular basis, weekly. 

MR. OLSEN: If Mr. Davenport wants to meet with me 
every Friday morning, we will break out the donuts and the 
coffee, and that would be fine. 

MR. STAMISON: I'll buy the donuts. 

CHAIRMAN LOCKYER: You two keep talking. 

I don't know that there's much more we can squeeze out 
of this topic. 

Senator, did you have anything more on it? 

SENATOR AYALA: It's not widespread, as I understand. 
It's just simply on that one building. I think it could be 
resolved. I don't see any problem with it now. 

CHAIRMAN LOCKYER: Other questions. 

I don't know how to ask this one, but there's a 
constant debate, and some undercurrent of opinion relative to 
the amount of space in the Capital vicinity that's state-owned 
buildings versus privately owned leased facilities. 

Do you have any general thoughts about the appropriate 
policy with respect to those matters? 

MR. STAMISON: Are you interested in the space itself? 

CHAIRMAN LOCKYER: Yes. 

MR. STAMISON: I might be able to dig something out, if 
you bear with me, please. 



46 

1 CHAIRMAN LOCKYER: I think you probably are familiar 

2 with this debate. 

3 MR. STAMISON: It's been around for a while. It's been 

4 around for a while. 

5 CHAIRMAN LOCKYER: Yes. 

6 MR. STAMISON: Just to give some people who might not 

7 be up-to-date, that preceded the legislation in '77. 

8 In 1976, there were 85 major agencies located in 

9 Sacramento at 150 different locations. One agency with 2,000 

10 employees was scattered in 22 different locations. Movement 

11 between related agencies, and even between departments within an 

12 agency, is cumbersome and costly. So, you could see why that 

13 led up to, gee, shouldn't we be having more consolidation in our 

14 buildings. 

15 Today, the departmental fragmentation that led to the 

16 '77 now is thus: Environmental Protection Agency now at 21 

17 different locations in the city; Consumer Affairs at 11 

18 locations; Health Services at 17 locations; Education at 7 

19 locations; EDD at 24 locations; DGS, not immune to this 

20 fragmentation, 18 different locations; Corrections at 5 

21 locations. 

22 The current status of state facilities, is what I think 

23 you're asking for, there are 111 different agencies now, with 

24 59,000 employees, occupying 13-and-a-half million net square 

25 feet of office space, at 250 locations. So, 6.4 million square 

26 feet, or 48 percent of this space, is state-owned. 

27 CHAIRMAN LOCKYER: How much? 

28 MR. STAMISON: It's 48 percent, 6.4 million square 



47 

feet; 7.1 million square feet, or 52 percent, is leased space; 
7.6 million square feet, or 56 percent of the space is downtown; 
and 5.9 million square feet, or 44 percent, is in outlying 
areas. 

Now, there will be a mix, even with the new plan. 
There will be a mix. Downtown does not make sense for all the 
agencies' needs. Some agencies want to do what we call one-stop 
shopping, and it would be ludicrous to have them located in a 
highrise or downtown. So, we'll be very flexible on that. 

CHAIRMAN LOCKYER: How about the appropriateness of 48 
versus 52? Are there any thoughts about that proportion that's 
public versus private? 

MR. STAMISON: We're going to take a very pragmatic 
business viewpoint on that. Whatever — whatever services the 
taxpayers best in terms of maximizing our bucks. 

CHAIRMAN LOCKYER: Seems to be the right test, I would 
say. 

Do you ever get lobbied by building owners that wish to 
lease some space or builds a new building? 

MR. STAMISON: Personally? My staff, yes, yes, from 
time to time. They're nice fellows. 

CHAIRMAN LOCKYER: Senator Petris. 

SENATOR PETRIS: Your agency's been working, I think, 
on Capital Area Plan prior on your time? 

MR. STAMISON: Yes, Senator. 

SENATOR PETRIS: I'm wondering where the Governor's 
Mansion fits into it. We used to have a Governor's Mansion 
nearby, until Jerry Brown moved out. 



48 

1 MR. STAMISON: Yes. 

2 SENATOR PETRIS: And rented a mattress to use in his 

3 very sparton quarters. He didn't think we should spend a lot of 

4 money for housing the Governor. 

5 But considering you're going into this long-range plan 

6 now, where does the mansion fit into it? 

MR. STAMISON: Senator, quite honestly, I don't have a 

8 clue. I remember years ago reading about it, but it hasn't come 

9 up on my scope, but Steve — 

10 CHAIRMAN LOCKYER: The right answer is, you could put 

11 it under the Subcommittee for Capital Historic Preservation. 

12 MR. OLSEN: We were going to suggest some amendments to 

13 Senator Petris' bill. 

14 CHAIRMAN LOCKYER: You should, when you have an 

15 opportunity to do that. I think it would be appropriate. 

16 SENATOR PETRIS: I'm glad I asked the question. 

17 MR. OLSEN: Senator Petris, I don't think we can tell 

18 you the answer right now. It's one of the issues that we're 

19 taking a look at in putting our next proposal together. 

20 My recollection of the more recent history of this is 

21 that, at least last year, there was a proposal that would have 

22 utilized a portion of some two and a half million dollars that 

23 is set aside right now for that purpose for renovation of the 

24 Stanford Home, for purposes of a facility that might serve as a 

25 residence or as reception center. 

2 6 There was some debate about whether or not that should 

27 be used in that manner, or whether it should be retained instead 

28 for its original intended purpose, which was a stand alone 



49 

residence for the Governor located in the downtown area. 

SENATOR PETRIS: I've forgotten, do we own that? Does 
the state own the Stanford Mansion? 

MR. OLSEN: Yes, it does. 

And it was not possible last year to reach an agreement 
on the appropriate use of that fund. 

I have received some communications from Senator 
Alquist's office — as I recall, he has an abiding interest in 
this issue — that he is agreeable that that money might be 
used, rather than for the permanent residence, instead for the 
renovation of the Stanford Home in the manner that was described 
last year. So, there may have been some change in opinion 
within some of the Members of the Legislature. 

I can't tell you right now what the administration's 
view on that is, simply because I haven't had the necessary 
discussions with the Governor's Office. 

SENATOR PETRIS: I wonder if you ought to look at the 
prior mansion, too. That was vacated because of fire hazards, 
and we didn't want the Governor to be jeopardizing himself and 
his family. So, I don't know if anything was done to renovate 
it sufficiently to make it up to code and so forth. 

Are you considering that building as well? 

MR. OLSEN: That particular building, I don't think, is 
within the scope of the studies we're currently undertaking. 

We're examining the Capital area, which is a particular 
piece of real estate that is 42 blocks south and east of Capital 
Park. The old Governor's Mansion is outside of that. So, 
we're taking a look at assets that are within a particularly 



50 

1 restrained area. 

2 CHAIRMAN LOCKYER: Senator Alquist, as you know, also 

3 wants us to have a unicameral Legislature, so the Governor could 

4 live in the Assembly or whatever. 

Senator Boatwright, I think, wanted to get a word in. 
6 SENATOR BOATWRIGHT: Mr. President and Members, I'm 

here -- I've given this a lot of thought — I'm here because I 

8 think that Mr. Stamison, and I only can compare him to past 

9 directors, but there's really been a vast improvement, in my 

10 opinion, in the directorship, and I can site those. 

11 We used to have a lot of sole-source contracting. 

12 That's been substantially reduced. 

13 We had a lot of taking care of your friends, which you 

14 and I fought out with the State Architect before and others. I 

15 have not seen that with the current Director. 

16 CHAIRMAN LOCKYER: He doesn't have any friends. 

17 [Laughter.] 

18 CHAIRMAN LOCKYER: Sorry, I didn't mean to interrupt. 

19 SENATOR BOATWRIGHT: That might be good. It might be 

20 good, if they were taking care of their friends, that he doesn't 

21 have friends. 

22 CHAIRMAN LOCKYER: I agree. Well, I liked his answer 

23 to the — I don't know if you were here — we talked about the 

24 fact that 48 percent of the space is state-owned, and 52 percent 

25 privately owned, and there's some tension that's ongoing. He 

26 seems to be able to keep entrepreneurs at arm's length in 

27 discussing those matters, and insisting on making the best deal 

28 for taxpayers. 



51 

SENATOR BOATWRIGHT: We had a good example. There was 
a recent bill that would have undercut, I think, the Urban Land 
Institute's recommendation that's coming up. We have 42 square 
blocks of land here. And I think we need to use those to cut 
down to the cost of land acquisition, which is as high, I'm 
told, it goes up to about $80 a foot in the downtown area, a 
foot. And we've got all this property, and the bill that was 
moving through, that was opposed by the Director, would have 
virtually eliminated what we hope will be a reduction in land 
costs in the future for the building of these buildings. 

I thought, because I happen to know that the person 
behind the bill is very close to the Governor, that it took some 
intestinal fortitude to oppose that bill. The bill was killed, 
and they actively worked against the bill. 

So, I'm here to tell you, I think that the Director has 
been doing a good job for the last year. And unless there's 
something I don't know about, I would urge that he be confirmed. 

Thank you very much. 

CHAIRMAN LOCKYER: You were about to close, I think. 
If there's anyone present that wishes to add to the 
list of concerns, please feel free to come forward. 

Otherwise, I think we're about ready to get to a vote. 

MR. STAMISON: I just want to add one more piece to the 
information I was supplying regarding the area in Sacramento. 
We currently spend $108 million a year annually for 
leasing space just in Sacramento. That's a full third what the 
state pays out to lease facilities throughout the state. 

So, that's why we look at every one of these conditions 



52 

1 on a case by case basis and take a very prudent business-like 

2 attitude. 

3 CHAIRMAN LOCKYER: Gentlemen, you wanted to add 

4 something? 

5 MR. RAMOS: Yes, sir. 

6 Mr. Chairman, I'm Jim Ramos. I'm the Coordinator of the 
Disabled Veterans Business Enterprise Networks, Sacramento 

8 vicinity. Also, I'm sorry I couldn't be here last Monday. 

9 CHAIRMAN LOCKYER: There were others. 

10 MR. RAMOS: But anyway, to make this very quick, I'm 

11 opposed to Mr. Stamison, not personally, but for some of the 

12 very professional reasons that we've cited in our letter to 

13 you. 

14 Number one, we're very concerned that this bill, this 

15 CARA, 3307, does in fact favor large business. We're talking 

16 about a pronouncement of 4,000 contracts down to 400, to 200. 

17 We're talking about getting into bed with contractors. 

18 I'm very concerned about the situation where we went to 

19 Mr. Stamison in December and asked him to form a small business 

20 and disabled veterans business advisory, to oversee, you know, 

21 what was happening in the small business community. 

22 I asked him at that time would he consider, you know, 

23 establishing a small business goal. That's required in the 

24 law. No Director has ever established a small business goal. 

25 Everybody knows about the five percent preference in the small 

26 business contracting, but nobody remembers Part A, which says 

27 the Director should establish a small business goal. 

28 We were looking at this program of emphasizing small 



53 

business as a safety net for the minority and the women 
community. Certainly, this is color-blind, a small business is 
color-blind, disabled veterans are color-blind. Nobody was born 
a small business person. Nobody was born a woman. 

So in this particular instance, we were looking at a 
safety net type — 

CHAIRMAN LOCKYER: I think they're born women. 

MR. RAMOS: I'm sorry. You're absolutely right. 

CHAIRMAN LOCKYER: But we were following you. 

MR. RAMOS: I apologize for that. 

I probably am one of the few people that actually read 
every page of 3307, and I've annotated those places where it, in 
fact, significantly impacts small business and the disabled 
veteran business community. 

I have a letter written to me from Senator Jay Vargas 
of the Department of Veterans Affairs that clearly states that 
the Governor's intent with regards to affirmative action and 
with regards to veterans programs, that they would not be 
impacted by the current review of affirmative action programs. 

But clearly, they do in fact affect veterans programs. 
And we're very concerned that we get swept out with the bath 
water. 

Veterans — I could go through a lot of situations, but 
we have veterans' businesses that are going out of because of 
the lack of opportunities. 

CHAIRMAN LOCKYER: What's the status of that bill now? 
Where is it? 

MR. RAMOS: It was going to go for hearing tomorrow. 



54 

1 CHAIRMAN LOCKYER: In the Assembly? 

2 MR. RAMOS: Yes. 

3 CHAIRMAN LOCKYER: I don't know what they'll do over 

4 there, but my recommendation would be to vigorously involve 

5 yourselves and your association in the Senate deliberations on 

6 the measure. 

7 I'm inclined to think that it's hard to blame the 

8 Director for policies that, perhaps, emanate from people higher 

9 than himself. 

10 MR. RAMOS: Sir, my only comment to that is, when we 

11 suggested to him -- 

12 CHAIRMAN LOCKYER: I know, you mentioned the small 

13 business advisory. 

14 MR. RAMOS: Right. We felt that with the previous 

15 Director, that we did have a two-way communication with him, 

16 and that we did solve a lot of issues. 

17 Certainly, you know, the small business code, the way 

18 that we do procurement today, perhaps, could be improved. But, 

19 you know, certainly You would expect that the small business 

20 community could be part of that forum to help improve that 

21 program. 

22 We've had really no opportunity to participate in 

23 that. That's where we're very concerned, is that we don't have 

24 an opportunity, and we appear to be shielded from Mr. Stamison. 

25 We really would like to help him be successful, but we 

26 feel very great frustration, because we have, in fact, been 

27 shunted aside. 

28 CHAIRMAN LOCKYER: Sir, did you want to add anything? 



55 

MR. BROCK: I'm Bert Brock. I'm a small business, 
minority DVBE, and again, I'm like Mr. Ramos, who's far more 
articulate than I am, and Mr. Stamison is far more articulate 
than I am. 

CHAIRMAN LOCKYER: Just in the interest of using our 
time efficiently, I want you to just tell us if your concern is 
the same or different. 

MR. BROCK: My objections are generally the same, with 
the emphasis more on the establishment of a minority council, 
advisory council. 

It seems to be loaded with his own deputies, so he's 
therefore going to get filtered words. As every commander and 
every leader in business knows, your hardest job is to get word 
that is not filtered so you actually know what's really going 
on. 

In this case, I don't see how he could find it out, 
unless one gets off — I'm sorry — moves ahead and gets 
started in this committee, and that it actually represents the 
small businessman. I don't care who's on it, as long as they 
are small business. 

That's all I have to say. 

CHAIRMAN LOCKYER: Thank you. 

Why don't you conclude, Mr. Stamison, by mentioning any 
small business advisory. I know we talked about it a little 
last session. You might give us an update on that and refresh 
our memories. 

MR. STAMISON: Indeed, a Small Business Advisory 
Council has been formed. There's never one that's existed 



56 

1 before in the Department of General Services. It's on small 

2 businesses, per se. 

3 And I have four of my executive staff very much 

4 involved on this. This is just not a discussion session. This 

5 is a session to find out where the real problems are. 

6 I'm very concerned that 5500 or so small businesses 
have disappeared from the roster since April of 1992, and we're 

8 going to fix it. It's very plain to see that business as usual 

9 before was not getting the job done. 

10 I can assure you, we're going to try something new, and 

11 we're going to get the job done. Small businesses are very 

12 important to this state and to the people of the state. 

13 CHAIRMAN LOCKYER: Okay, thank you, sir. 

14 Senator Beverly. 

15 SENATOR BEVERLY: Are you ready for a motion. Move we 

16 recommend confirmation. 

17 CHAIRMAN LOCKYER: Call the roll. 

18 SECRETARY WEBB: Senator Ayala. 

19 SENATOR AYALA: Aye. 

20 SECRETARY WEBB: Ayala Aye. Senator Lewis. 

21 SENATOR LEWIS: Aye. 

22 SECRETARY WEBB: Lewis Aye. Senator Petris. 
2 3 SENATOR PETRIS: Aye. 

24 SECRETARY WEBB: Petris Aye. Senator Beverly. 

25 SENATOR BEVERLY: Aye. 

26 SECRETARY WEBB: Beverly Aye. Senator Lockyer. 

27 CHAIRMAN LOCKYER: Aye. 

28 SECRETARY WEBB: Lockyer Aye. Five to zero. 



57 



CHAIRMAN LOCKYER: Good luck, sir. 

MR. STAMISON: Thank you, Senator. 

[Thereupon. This portion of the 
Senate Rules Committee hearing was 
terminated at approximately 4:18 P.M.] 
— 00O00 — 



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CERTIFICATE OF SHORTHAND REPORTER 

I, EVELYN J. MIZAK, a Shorthand Reporter of the State 
of California, do hereby certify: 

That I am a disinterested person herein; that the 
foregoing transcript of the Senate Rules Committee hearing was 
reported verbatim in shorthand by me, Evelyn J. Mizak, and 
thereafter transcribed into typewriting. 

I further certify that I am not of counsel or 
attorney for any of the parties to said hearing, nor in any way 
interested in the outcome of said hearing. 



J/L 



^/ IN WIJLNESS WHEREOF, I have hereunto set my hand this 



day of 




/ 



, 1996. 




L/ltctt 



TlJlZAK 
Shorthand^ Reporter 



•. 



299-R 

Additional copies of this publication may be purchased for $3.75 per copy 
(includes shipping and handling) plus current California sales tax. 

Senate Publications 

1020 N Street, Room B-53 

Sacramento, CA 95814 

(916)327-2155 

Make checks payable to SENATE RULES COMMITTEE. 
Please include Stock Number 299-R when ordering. 



L boo 

M 

nit 



/ 






Docur ^ Dgrr . 

JUN 6 1996 

SAN FRANOiSuo 
PUBLIC LIBRARY 



HEARING 



SENATE RULES COMMITTEE 

STATE OF CALIFORNIA 




STATE CAPITOL 

ROOM 113 

SACRAMENTO, CALIFORNIA 

MONDAY, MAY 6, 1996 
1:57 PM 



300-R 



Reported by 



SENATE RULES COMMITTEE 
STATE OF CALIFORNIA 



HEARING 



STATE CAPITOL 

ROOM 113 

SACRAMENTO, CALIFORNIA 



MONDAY, MAY 6, 1996 
1:57 P.M. 



Evelyn J. Mizak 
Shorthand Reporter 



11 



APPEARANCES 

MEMBERS PRESENT 

SENATOR WILLIAM LOCKYER, Chair 

SENATOR ROBERT BEVERLY, Vice Chair 

SENATOR RUBEN AYALA 

SENATOR JOHN LEWIS 

SENATOR NICHOLAS PETRI S 

STAFF PRESENT 

GREG SCHMIDT, Executive Officer 

PAT WEBB, Committee Secretary 

RICK ROLLENS, Consultant on Bill Referrals 

NANCY MICHEL, Consultant on Governor's Appointments 

ALSO PRESENT 

JAMES P. ANTT, JR. 

Real Estate Commissioner 

LLOYD G. WRIGHT, Member 
Acupuncture Committee 

COLLEEN S. CASEY, Member 

Workers * Compensation Appeals Board 



Ill 

INDEX 

Page 
Proceedings l 

Governor's Appointees: 

JAMES P. ANTT, JR. 

Real Estate Commissioner 

Questions by CHAIRMAN LOCKYER re: 

Biggest Challenge Thus Far 1 

Elimination of More Positions 2 

Impact of Budget Reduction on Consumers 2 

Causes for Revenue Stream Being Down 2 

Current General Budget 3 

Code Revisions 3 

Continuing Education 5 

Questions by SENATOR AYALA re: 

Guidelines for Professional Conduct 6 

Number of Licenses Suspended or Revoked 

Due to Department's Actions, and Causes 7 

Enforcement Tools 8 

Authority to Punish Violators 8 

Questions by CHAIRMAN LOCKYER re: 

Hazard Reports 9 

Broker's Obligation to Review Work 

of Salespeople 9 

Need for Brokers to be Schooled in 

Housing Discrimination Laws 10 

Motion to Confirm 11 

Committee Action 11 



IV 



9 
10 
11 
12 
13 
14 



LLOYD G. WRIGHT, Member 

Acupuncture Committee 11 

Questions by CHAIRMAN LOCKYER re: 

Most Difficult Issues 12 



Controversies over Enforcement and 
3 Administration of Examinations 12 

6 Motion to Confirm 13 

7 Committee Action 13 

8 COLLEEN S. CASEY, Member 
Workers ' Compensation Appeals Board 13 



Background and Experience 14 

Questions by CHAIRMAN LOCKYER re: 

Names of Law Firms 14 

Most Difficult or Most Fun Issues 15 

Questions by SENATOR AYALA re: 



Significance that Board Is Comprised of 

15 Four Women and Two Men 16 

16 Questions by SENATOR PETRIS re: 

17 Jim Frolik 16 

18 Motion to Confirm 17 

19 Committee Action 18 

20 Termination of Proceedings 18 

21 Certificate of Reporter 19 

22 
23 
24 
25 
26 
27 
28 



P-R-O-C-E-E-D-I-N-G-S 
— 00O00 — 

CHAIRMAN LOCKYER: Governor's appointees, going in 
order, we have Mr. Antt first. 

Good afternoon sir. How are you? 

MR. ANTT: Pretty good, sir. 

CHAIRMAN LOCKYER: Did you want to begin with any 
opening description or comment? 

MR. ANTT: No, sir. 

CHAIRMAN LOCKYER: You're going to make it hard for us, 
then. We have to quickly start asking some questions. 

MR. ANTT: At your pleasure. 

CHAIRMAN LOCKYER: I guess you grew up in Bakers field? 

MR. ANTT: Yes, sir. 

CHAIRMAN LOCKYER: Is grow up the right word? 

MR. ANTT: Well, originally from — 

CHAIRMAN LOCKYER: Somebody moved there? 

MR. ANTT: I moved there in about the 7th grade. 

CHAIRMAN LOCKYER: And you've been very active 
throughout your professional career in various forms of real 
estate, financing, and so on. 

MR. ANTT: About 30 years now. 

CHAIRMAN LOCKYER: What have you found the biggest 
challenge to be thus far as the Director? 

MR. ANTT: Probably the fiscal challenges in a market 
changing dramatically. Not realizing from the practitioner the 
demand as a special fund unit, where you have to have a balanced 
budget, and therefore you rely quickly just strictly on the 



1 dollars derived from both the real estate licensees, both new 

2 and renewal, as well as subdivisions. Under the current 

3 economic conditions for the last six years in the State of 

4 California, we've been going down instead of up. 

5 CHAIRMAN LOCKYER: So, Finance is talking about 

6 eliminating 31 positions? 

7 MR. ANTT: Another one, yes, sir. We're down about 102 

8 employees from 1990. 

9 CHAIRMAN LOCKYER: Does that produce any gaps or 

10 thinness in any regulatory function. 

11 MR. ANTT: We're trying to steer into those areas so we 

12 do not have it. When you wear the hat as a regulator versus 

13 some of the other changes that you do, I think the number one 

14 challenge is for the protection of the consumer in answering the 

15 complaints. 

16 While there's a little bit of a slowness in some of it, 

17 I don't know it's anymore dramatic than it's been over the last 

18 five years. Some of our problems have probably been in the area 

19 of the Office of Administrative Law and getting hearing dates 

20 more than some of our investigatory problems. 

21 CHAIRMAN LOCKYER: So, you don't think these efforts to 

22 reduce the budget would have any noticeable impact on a consumer 

23 that is purchasing a house? 

24 MR. ANTT: No, sir. 

25 CHAIRMAN LOCKYER: But the funding is down, the revenue 
2 6 stream. Is there a cause for that that you're aware of? 

27 MR. ANTT: It's strictly the licensee base is down from 

28 about 380,000 to about 326,000. 



CHAIRMAN LOCKYER: Over what period of time. 

MR. ANTT: Since 1990, the high water mark was 380,000 
licensees in the State of California in 1990. There's as of 
last week, 32 6,400. Pretty dramatic. Our revenue has gone from 
30 million to a little over 21, 21.4. Personnel has gone from 
412 to 301. 

We've closed one office, the Santa Ana office, but we 
were able to still service that area out of Los Angeles and San 
Diego area. We're monitoring very close the number of people 
taking tests and/or complaints from that area so we can 
adequately service those areas. 

CHAIRMAN LOCKYER: What's the general budget now? 

MR. ANTT: The budget's around 20. I think approved 
budget last year was 25.3. I think the other budget, with our 
latest BCP, I think, is around 23.4. 

Those are round numbers . 

CHAIRMAN LOCKYER: So, we still have a realtor for 
every ten thousand citizens. 

MR. ANTT: Or real estate licensee. 

CHAIRMAN LOCKYER: There's some note in our materials 
that there was a rather extensive revision of the code of 
regulations during your first year. 

Could you tell us about that? 

MR. ANTT: The hearing date is this Thursday, May 9th. 
And some of the things that we're trying to do seem to be very 
duplicate, from my standpoint as a practitioner, whereas, in — 
some restrictions or requirements are to keep certain documents 
for four years and others for three. We're trying to keep those 



1 consistent so they are consistently, every three years. 

2 We're going to evaluate, and we haven't made up our 

3 mind, we're making some suggestions on the continuing education 

4 area. While we're not getting away from the 45 hours of 

5 mandated education, we are talking about some of the problems, 

6 that you put the burden on the sponsors, those public people who 

7 are sponsoring the courses, if you will. 

8 There, for instance, as a small example, you have to be 

9 in attendance at 90 percent live of the course, and every time 

10 you check in and check out, you then have to keep that sign-in 

11 and sign-out for seven years. We thought that was somewhat, you 

12 know, not needed. So, we're trying to get those down to where, 

13 if you have enough faith in the sponsor to sponsor a course and 

14 authorize them, you ought to have the certifications, much like 

15 the Bar does, if you will. 

16 And we're also talking about, in the economic 

17 conditions we're in, the minimum course hour is three hours. 

18 We're talking about maybe allowing some one-hour courses, to 

19 look at that, where some of the licensees may want to take it 

20 during lunch hour. They may want to take it in the morning or 

21 the evening. 

22 And probably — we're talking with all of the industry 

23 before we started this, so, hopefully, we would have the input 

24 from the industry as to some of the changes. We have heard from 

25 them. They will be at regulation hearing this Thursday. 

2 6 I'm quite sure that we will not have a hundred percent 

27 approval. I don't think we ever have nor ever will. There will 

28 be some that will be opposed to it, and then we'll have to sit 



there and listen to their reasons. 

CHAIRMAN LOCKYER: So, when they talk about oversight 
on the quality of continuing ed., is that principally how many 
hours? 

MR. ANTT: That's my question, because quality is a 
very subjective thing. Quality in whose eyes? Because it's 
three hours versus one hour, is that quality? That's — I've 
got to find out from them. 

You know, I'm just telling you that as a practitioner, 
there has to be some changes in those areas that are meaningful, 
that are both knowledgeable and accomplish the purpose to 
protect the consumer from the people who don't have the 
background or the knowledge. 

CHAIRMAN LOCKYER: But that's what's meant by that 
worry, do you think? Is there some other party or regulatory — 

MR. ANTT: I think some of it is protection of the 
industry. I fully understand that. Because it may challenge 
some of the — I know I was at the community college group last 
Friday, and they're very concerned. Statutorily, they cannot 
authorize or allocate correspondence courses. This is — our 
times are changing very dramatically, if you will, in the area 
of education and continuing education. And they're going to 
have to adapt to some of those changes. 

I think that's part of the problem that some of the 
people feel threatened about. The way they've been doing it for 
ten years may not be the way it's done for the next ten years. 

CHAIRMAN LOCKYER: How about the matter of maintaining 
a piece of the license fund in the education account? I guess 



6 

1 eight percent. 

2 MR. ANTT: Yes, it's still the 8-12. 

3 One of the things that has happened is, in this 

4 downsizing, if you will, we have -- there's some allocations 

5 that the funds are still there, and in effect, if needed, you 

6 would take those from your general fund, as I understand it, 
from the general real estate fund, and transfer those over to 

8 the real estate education fund. 

9 We have not had the requests for any of the research 

10 programs that have been in the years past. 

11 CHAIRMAN LOCKYER: Other questions from Members? 

12 SENATOR AYALA: Question, Mr. Chair. 

13 CHAIRMAN LOCKYER: Senator. 

14 SENATOR AYALA: There's been quite a bit of fraud, I 

15 understand, in the equity loan area of real estate. It seems to 

16 me that strengthening those guidelines would be more helpful. 

17 I understand you've been quoted as saying that you 

18 would like to end the department practice of issuing guidelines 

19 for professional conduct. Can you explain that to us? When 

20 there seems to be a greater need for it, you're asking that it 

21 be relaxed? 

22 MR. ANTT: No, what we're not — Senator, we are not 

23 asking to relax those. What we're trying to do is, there is 

24 some duplicate statutory language. Some of the regulations are 

25 in two or three different places. So, what we're saying is, 

26 they're not needed in some of those other areas, number one. 

27 Number two, we agree with you, the need for the 

28 protection of some of the consumers, if you will. We have 



worked with Consumers Union, in spite of some of the press. We 
have offered to — we've recently done a video with them for the 
inner cities, some of the groups. There's about 150 senior 
citizen groups that we've gone out in mailings and said, we'll 
appear with, before, or at your meetings to talk about some of 
the problems that you're facing on the loans on the inner cities 
that constantly make the big headlines, where somebody went in 
acting as a repair person and a loan agent, and took advantage 
of somebody who wasn't very knowledgeable. 

SENATOR AYALA: You're not concerned, you're not 
wanting the oversight to be watered down. 

You're just saying, where the duplication is, just 
remove the duplication. 

MR. ANTT: Yes, yes. As we reviewed the legislation, 
there were about 166 regulations, and about 22 percent we're 
repealing, and about 22 percent we're changing a little bit, if 
you will, or suggesting some modification. 

But one of the things in continuing education, there's 
16 pages in the regulation. If you read some of those, they are 
very, very repetitive of other parts of the regulations. That's 
what we're trying to clean up, so everybody can understand it a 
little easier. 

SENATOR AYALA: How many licenses have been suspended 
or revoked in recent years as a result of the department's 
actions, and for what causes? 

MR. ANTT: We received approximately 10,000 consumer 
complaints. We acted on about 4200 of those in the last year. 
The other ones are either out of our jurisdiction or they 



8 

1 weren't founded. 

2 SENATOR AYALA: Primarily for what are the complaints 

3 you received? 

4 MR. ANTT: They go from failure to disclose a material 

5 fact, of hiding a material fact. Three percent of our problems 

6 in our consumer complaint area, enforcement, are in the area of 
mortgage brokerage problems, where either (a) , they have — 

8 probably, I guess, the correct way would be, they have 

9 advertised to seek investors who may want to put money with them 

10 on a return, normally higher returns. They have taken that 

11 money and failed to pay them back, a Ponzee scheme, if you will, 

12 borrowing from the next person to pay it. 

13 SENATOR AYALA: Are those problems increasing or 

14 decreasing, or remaining pretty stable. 

15 MR. ANTT: They're pretty stable right now. 

16 SENATOR AYALA: Do you have tools to track down some of 

17 these unlicensed agents and brokers that are involved in that 

18 kind of work? 

19 MR. ANTT: Some of that's very difficult. We try to 

20 work hand in hand very close with district attorneys in the 

21 local jurisdictions. The problem that they have is, they have 

22 the same fiscal problem that the state is having right now, so, 

23 plus, the other problem is, they normally don't have the 

24 expertise in the area of mortgage financing and/or real estate, 

25 so they ask us, or our staff people, to work with them. 

2 6 SENATOR AYALA: Do you have the authority to punish 

27 some of those violators? 

2 8 MR. ANTT: There are some limits, yes. We have 



revocation of license and some fines, not criminal. 

SENATOR AYALA: Thank you, Mr. Chairman. 

CHAIRMAN LOCKYER: There seem to be a lot of sort of 
technical questions that are difficult for lay people, at least 
me, to follow, mostly regarding the winnowing of regulations. 

One that's again in our information deals with 
subdivision developments, which says that the Commissioner can 
ask for a hazard report if it's an area subject to flood or 
fire. 

What have you found? That there's no point in asking 
for those, or what? 

MR. ANTT: No. That's asked in another — that is 
asked in another section of the law, number one. 

Number two, it's in our form, that we ask every 
subdivider. That specific question is part of the standard 
application of every subdivision in the State of California. 
Once again, it was duplicative. It's already in another 
section. 

CHAIRMAN LOCKYER: Okay. There are some are more 
comments like that. Perhaps it would be constructive to at 
least have a reaction on the record. 

The one that seems to me to be the more serious, this 
is like having a broker review the salesperson's work and 
initial. That requirement would be gone and replaced with 
reasonable oversight requirements. 

And I guess whatever consumer group commented was 
concerned that it might be too unclear what the broker's 
obligations are to review the work of a salesperson. 



10 

1 MR. ANTT: My recollection — I do not have that right 

2 in front of me -- but my recollection is that we're not doing 

3 away with it. What we're saying is, because of the work style, 

4 that I think it says within three days, and I think we're 

5 changing that to within five days, is our substantive change. 

6 CHAIRMAN LOCKYER: Maybe I should just give you this 
piece of paper, and you can look at that more easily than me 

8 reading it to you, and you guessing about what it includes. 

9 Sorry, but this just came in today, so I don't have 

10 much advance notice for you. There's three or four listed. 

11 Does it ring a bell? 

12 MR. ANTT: My understanding is, we're still requiring 

13 the certification, the three-year retention of the documentation 

14 is pretty standard throughout. 

15 That first one would surprise me. 

16 CHAIRMAN LOCKYER: You might keep that, if you would. 

17 You might refer on your own. 

18 MR. ANTT: Sure. 

19 CHAIRMAN LOCKYER: Before the final decisions get 

20 made. 

21 The last one on the sheet indicates that there may be a 

22 deletion of the current requirement that brokers be schooled in 

23 laws about housing discrimination. That would be, it seems to 

24 me, unwise. 

25 MR. ANTT: We would no — this is not — this is not 

26 what we intend, I can tell you that for sure. 

27 CHAIRMAN LOCKYER: You might keep that and perhaps drop 

28 a note as you have a chance to review the final regulatory 



11 



changes . 

Other questions from any Member. 

Is there anyone present who wishes to comments for or 
against the appointment. 

Senator Beverly. 

SENATOR BEVERLY: Move we recommend confirmation. 

CHAIRMAN LOCKYER: We have a motion to that effect. 
Call the roll. 

SECRETARY WEBB: Senator Ayala. 

SENATOR AYALA: Aye. 

SECRETARY WEBB: Ayala Aye. Senator Lewis. 

SENATOR LEWIS: Aye. 

SECRETARY WEBB: Lewis Aye. Senator Petris. 

SENATOR PETRIS: Aye. 

SECRETARY WEBB: Petris Aye. Senator Beverly. 

SENATOR BEVERLY: Aye. 

SECRETARY WEBB: Beverly Aye. Senator Lockyer. 

CHAIRMAN LOCKYER: Aye. 

SECRETARY WEBB: Lockyer Aye. Five to zero. 

CHAIRMAN LOCKYER: Good luck, sir — 

MR. ANTT: Thank you very much. 

(Thereupon legislative agenda items 
were acted upon by the Rules Committee.) 

CHAIRMAN LOCKYER: How about Mr. Wright, Acupuncture. 

MR. WRIGHT: Good afternoon. 

CHAIRMAN LOCKYER: Good afternoon. Did you want to 
start with my comment at all? 

MR. WRIGHT: I don't think ~ 



12 

1 CHAIRMAN LOCKYER: You're invited to. 

2 MR. WRIGHT: I did give a little handout that you all 

3 have. I don't really have too much to comment at this time. 

4 I'm simply open for questions, if you have any, are regarding my 

5 appointment. 

6 CHAIRMAN LOCKYER: You might comment, you've been doing 

7 this for how long? 

8 MR. WRIGHT: I've been on the Acupuncture Committee for 

9 three years now. 

10 CHAIRMAN LOCKYER: What's been the most difficult issue 

11 that they've dealt with during your tenure? 

12 MR. WRIGHT: We've had a number of issues that have 

13 actually been very important to the Committee. I think the 

14 conduction of the examination has always been, you know, fairly 

15 high. We have also gone through deep concerned about the 

16 enforcement as well. 

17 And I believe that, you know, those probably are the 

18 two most important issues that the Committee attends to. 

19 CHAIRMAN LOCKYER: Are there controversies associated 

20 with those? 

21 MR. WRIGHT: Those particular areas, the administration 

22 of exams? Not really controversies. The administration of 

23 examinations for acupuncturists does run into its complexities 

24 just because of the nature of the profession and its field. 

25 I think the nature of the enforcement issues are 

26 probably pretty standard as with any other profession. We run 

27 into the same problems that any of the health care professionals 

28 do, and just, you know, assuring that, you know, we do a good 



13 

job in that area and attend to the hard work there is — you 
know, requires a considerable amount of focus. 

CHAIRMAN LOCKYER: Are there are questions from Members 
at all. 

Anyone present that would wish to comment either for or 
against the appointment. 

All right, probably Senator Beverly's turn. 

SENATOR BEVERLY: Move we recommend confirmation. 

CHAIRMAN LOCKYER: Motion to that effect. Call the 
role. 

SECRETARY WEBB: Senator Ayala. 

SENATOR AYALA: Aye. 

SECRETARY WEBB: Ayala Aye. Senator Lewis. 

SENATOR LEWIS: Aye. 

SECRETARY WEBB: Lewis Aye. Senator Petris. 

SENATOR PETRIS: Aye. 

SECRETARY WEBB: Petris Aye. Senator Beverly. 

SENATOR BEVERLY: Aye. 

SECRETARY WEBB: Beverly Aye. Senator Lockyer. 

CHAIRMAN LOCKYER: Aye. 

SECRETARY WEBB: Lockyer Aye. Five to zero. 

CHAIRMAN LOCKYER: Thank you, sir. 

MR. WRIGHT: Thank you. 

CHAIRMAN LOCKYER: Ms. Casey is back. 

MS. CASEY: Good afternoon. 

CHAIRMAN LOCKYER: Do you want to tell us about 
yourself? 

MS. CASEY: Sure. I'm happy to be here this afternoon. 



14 

1 I appreciate the opportunity to tell you a little bit more about 

2 myself. 

3 For the past 14 years, I've worked in a variety of 

4 capacities in the legal profession. In private practice, I 

5 assisted small business owners and individuals with their tax 

6 and estate planning matters. As a pro bono volunteer for the 
San Francisco Bar Association, I worked with lower income 

8 individuals on all sorts of legal matters. I was a founding 

9 director of our homeless advocacy project. 

10 And so, I feel I've gained a broad prospective of how 

11 the legal system has affected individuals from all walks of 

12 life. 

13 For the past eight months, I've been a commissioner for 

14 the Workers Compensation Appeals Board. And after about three 

15 weeks on the Board, I was given a full caseload, which means I 

16 reviewed about 40 to 60 files a week since that time. And 

17 during that time, I feel I've been able to consider the rights 

18 of all the parties, and that I've been able to apply a fairly 

19 consistent analytical standard to the fact situations that have 

20 been presented. 

21 At this point, I'd like to answer any questions that 

22 you might have. 

23 CHAIRMAN LOCKYER: I'm looking at the law firms that 

24 you've worked with. 

25 MS. CASEY: Yes. 

2 6 CHAIRMAN LOCKYER: The names are terrific. 

27 MS. CASEY: I love them. They're great, yeah. 

28 CHAIRMAN LOCKYER: Frolik, tax lawyer; Schrambling and 



15 

Chu. 

MS. CASEY: This was actually a consideration before I 
joined any firm, was making sure that the names were 
interesting. 

CHAIRMAN LOCKYER: My favorite Bay Area one is Low, 
Ball and Lynch. 

MS. CASEY: Unfortunately, they turned me down. I did 
apply for a job with them. 

CHAIRMAN LOCKYER: Insurance defense firm, they think 
it's cute, and they live up to their name. 

Anyhow, what's been tough or fun about your job? 

MS. CASEY: Gee, this has been the totally most cool 
job I've ever had in my whole entire life. It is just 
absolutely wonderful. 

CHAIRMAN LOCKYER: Why? 

MS. CASEY: We had a wonderful opportunity this year to 
examine how the reform package, which you guys did such a 
terrific job with, has been implemented. And we've been able to 
see how fraud claims have gone down, insurance premiums have 
been reduced by about 31 percent, stress claims have been 
reduced by about 50 percent. 

And in a system that costs about $11 billion a year, 
apparently it's been estimated that there's been a savings of 
about $1.5 billion. So, that's exciting. That's really fun to 
watch, and it's fun to be part of the system that's implementing 
that. 

CHAIRMAN LOCKYER: Is there anyone present who'd wish 
to comment either for or against the nomination. 



16 

1 Any questions from Members? Senator. 

2 SENATOR AYALA: I know there is one vacancy. 

3 Any significance to the fact that you have four women 

4 and two men? 

5 Are you tougher or more liberal? 

6 MS. CASEY: I think it's pretty neutral. I don't think 
the sex really has anything to do with it. I think we're 

8 probably more calm. 

9 SENATOR AYALA: You're more calm? 

10 MS. CASEY: I think the women are, yeah. 

11 SENATOR AYALA: Than men? 

12 MS. CASEY: Yeah, I think so. I think that's probably 

13 true. Although, the two male members of our Board are 

14 wonderful, absolutely wonderful. Dick Gannon is — 

15 SENATOR AYALA: But not very calm. 

16 " [Laughter. ] 

17 MS. CASEY: They're probably more animated. No, 

18 they're not meek, but they're probably more animated than we 

19 are. 

20 It's a great group. We really are fortunate. We are 

21 extremely, extremely fortunate with the members that we have on 

22 our Board. 

23 CHAIRMAN LOCKYER: Well, okay, Senator? 

2 4 SENATOR PETRIS: I'd like to go back to Mr. Frolik. 

25 What's his first name? 

26 MS. CASEY: Jim Frolik. 

27 SENATOR PETRIS: It is Jim. 

2 8 MS. CASEY: Yeah, do you know him? 



17 

SENATOR PETRIS: We were school mates. 

MS. CASEY: Did you go to Stanford with him? 

SENATOR PETRIS: Yes. 

MS. CASEY: He's a terrific guy. 

SENATOR PETRIS: I met him at Boys' State in 1938, 
representing my high school. 

Say hi for me. 

MS. CASEY: I will definitely do that. He was a Rhodes 
Scholar, tennis player, terrific, wonderful person. 

SENATOR PETRIS: We had a bunch of Rhodes Scholars from 
my law school class. One of them was Tatum, the golfer, and he 
was a tennis player. You have to be an athlete in order to 
qualify, as well as top grades. There were three or four out of 
my class. Just amazing. 

CHAIRMAN LOCKYER: Senator Petris has an interest in 
Rhodes . 

MS. CASEY: He'll be very honored to hear that you said 
that about him. It'll be a thrill for him to hear that. 

CHAIRMAN LOCKYER: Other questions. 

Is that a motion, Senator Petris? 

SENATOR PETRIS: Yes, sir. 

CHAIRMAN LOCKYER: Let's call the roll. 

SECRETARY WEBB: Senator Ayala. 

SENATOR AYALA: Aye. 

SECRETARY WEBB: Ayala Aye. Senator Lewis. 

SENATOR LEWIS: Aye. 

SECRETARY WEBB: Lewis Aye. Senator Petris. 

SENATOR PETRIS: Aye. 



18 



1 SECRETARY WEBB: Petris Aye. Senator Beverly. 

2 SENATOR BEVERLY: Aye. 

3 SECRETARY WEBB: Beverly Aye. Senator Lockyer. 

4 CHAIRMAN LOCKYER: Aye. 

5 SECRETARY WEBB: Lockyer Aye. Five to zero. 

6 MS. CASEY: Thank you. 

7 CHAIRMAN LOCKYER: Well, your enthusiasm for the work 

8 is infectious. Good luck, keep it up. 

9 MS. CASEY: Thank you very much, thank you. 

10 [Thereupon. This portion of the 

11 Senate Rules Committee hearing was 

12 terminated at approximately 2:55 P.M.] 

13 — ooOoo — 
14 
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21 
22 
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19 
CERTIFICATE OF SHORTHAND REPORTER 

I, EVELYN J. MIZAK, a Shorthand Reporter of the State 
of California/ do hereby certify: 

That I am a disinterested person herein; that the 
foregoing transcript of the Senate Rules Committee hearing was 
reported verbatim in shorthand by me, Evelyn J. Mizak, and 
thereafter transcribed into typewriting. 

I further certify that I am not of counsel or 
attorney for any of the parties to said hearing, nor in any way 
interested in the outcome of said hearing. 

jj IN WITNESS WHEREOF, I have hereunto set my hand this 



day of 'QntfdQ^k^i / 1996. 





IVE] 

Shorthand Repo] 



300-R 

Additional copies of this publication may be purchased for $3.00 per copy 
(includes shipping and handling) plus current California sales tax. 

Senate Publications 

1020 N Street, Room B-53 

Sacramento, CA 95814 

(916)327-2155 

Make checks payable to SENATE RULES COMMITTEE. 
Please include Stock Number 300-R when ordering. 






/ 



<?A 



J UN 6 1996 

*ANCiSCO 
PUBLIC LIBRARY 



• *-*? 






HEARING 



SENATE RULES COMMITTEE 

STATE OF CALIFORNIA 




STATE CAPITOL 

ROOM 113 

SACRAMENTO, CALIFORNIA 

MONDAY, MAY 13, 1996 
2:10 PM 



301-R 



SENATE RULES COMMITTEE 
STATE OF CALIFORNIA 



HEARING 



STATE CAPITOL 

ROOM 113 

SACRAMENTO, CALIFORNIA 



MONDAY, MAY 13, 1996 
2:10 P.M. 



Reported by 



Evelyn J. Mizak 
Shorthand Reporter 



11 



APPEARANCES 

MEMBERS PRESENT 

SENATOR WILLIAM LOCKYER, Chair 

SENATOR ROBERT BEVERLY, Vice Chair 

SENATOR RUBEN AYALA 

SENATOR JOHN LEWIS 

SENATOR NICHOLAS PETRI S 

STAFF PRESENT 

GREG SCHMIDT, Executive Officer 

PAT WEBB, Committee Secretary 

RICK ROLLENS, Consultant on Bill Referrals 

NANCY MICHEL, Consultant on Governor's Appointments 

ALSO PRESENT 

DIXON ARNETT, Director 
Department of Aging 

THOMAS P. MCCAFFREY, Deputy Secretary 
Health and Welfare Agency 

PAUL K. RICHARDSON, General Counsel 
Agricultural Labor Relations Board 



Ill 

INDEX 

Page 
Proceedings 1 

Governor's Appointees; 

DIXON ARNETT, Director 

Department of Aging 1 

Background and Experience 1 

Questions by SENATOR AYALA re: 

Integration of Programs 4 

Possibility of Federal Funds 5 

Motion to Confirm 6 

Committee Action 7 

THOMAS P. MCCAFFREY, Deputy Secretary 

Health and Welfare Agency 7 

Background and Experience 7 

Questions by CHAIRMAN LOCKYER re: 

Most Difficult Issue 8 

Motion to Confirm 9 

Committee Action 10 

PAUL K. RICHARDSON, General Counsel 

Agricultural Labor Relations Board 10 

Background and Experience 10 

Questions by CHAIRMAN LOCKYER re: 

En j oyment of Work 12 

Hardest Part 12 

Backlog of Cases 13 

Questions by SENATOR AYALA re: 

Success of Intent of ALRB 14 

Restoration of Lost Funding 15 



IV 



Pending Delayed Ballot Counting Cases 

before Board Currently 16 

Cause of Delays 17 

Board's Ability to Review Dismissed 

Cases 18 

Role of Board Members 19 

Questions by CHAIRMAN LOCKYER re: 

Philosophy on Make Whole Remedy 20 

Motion to Confirm 21 

Committee Action 21 

Termination of Proceedings 21 

Certificate of Reporter 22 



P-R-O-C-E-E-D-I-N-G-S 
— 00O00 — 

CHAIRMAN LOCKYER: Mr. Arnett, I guess you're next 
here. 

MR. ARNETT: Mr. Chairman and Members, I am here to ask 
for your consent to serve as Director of the Department of Aging 
in accordance with the Governor's appointment effective last 
September first. 

Since that time, I've had the opportunity to work 
extensively on updating the Older Californians Act. With luck, 
within a month's time, we will bring to you amendments to two 
bills, companion bills much like the long-term care pilots of 
last year. One by Assemblyman Granlund on the Assembly side, 
and one by Senator Mello on the Senate side. 

The idea here is purposefully bipartisan, purposefully 
bi-house, and it follows the recent completion of some 50 
hearings statewide that we have held on amendments to the Older 
Californians Act. In almost all of the 33 area agencies on the 
aging since last December, we've held local hearings and 
meetings. We had five regional hearings around the state, and 
in fact, my staff is meeting today and tomorrow to amalgamate 
the tentative advice of the California Commission on Aging, 
which, in turn, consulted with the Triple A Councils and with 
the California Senior Legislature, along with the Triple A 
directors of the 33 area agencies. 

It's a pretty comprehensive effort. It will have been, 
by the time we all get through, the first time that there will 
have been a comprehensive review of the Older Californians Act 



1 since its inception 22 years ago. It coincides with the 

2 Congressional consideration of the five-year reauthorization of 

3 the Older Americans Act, with which I would sincerely hope the 

4 Congress would hurry up and do its job so that we can coordinate 

5 with that activity. But even without that, we can do an awful 

6 lot of the update that we have in mind. 

7 At the same time, and perhaps more importantly, we are 

8 intending to ask you to include in the law a mission statement 

9 or preamble, or however it's done, under duties and obligations 

10 of the Department of Aging, a huge emphasis on home and 

11 community based services, which is being done in many counties 

12 now, and is really actually being done in as much as 16 states 

13 elsewhere across the country. It is finally an idea whose time 

14 has come. 

15 And what it really simply means, in addition to an easy 

16 point of access for the consumer, is a continuum of care, 

17 effective case management, without making the consumer have to 

18 worry about the seams of state government or federal government, 

19 if you will. The expression, seamless government is coming into 

20 vogue with the idea that it's this consumer who has a single 

21 point of access, and then runs along the continuum of service in 

22 a coordinated and integrated fashion, much as you put into the 

23 long-term care pilots of last year. What we're doing is very 

24 highly coordinated with that. 

25 That's my task and my job, first and foremost, at a 

26 time when the aging population is' growing geometrically. A 

27 person turns 50 — I already did so sometime ago — every 7.5 

28 seconds in the United States of America. By the year 2002, it 



will be every 4.9 seconds/ 24 hours a day, 365. 

CHAIRMAN LOCKYER: Turns 60? 

MR. ARNETT: Turns 50. 

So, you've got the current generation of, let's say, 
over 60. The other day, I have to tell you a quick story, I 
walked into Jewish Family Services in Los Angeles for a tour 
there, and there to greet me was a 100-year-old grandmother who 
qualified for our services, as well as their care and attention, 
an 80-year-old daughter, and a 60-year-old granddaughter, all of 
whom qualified for our programs. So, heck, the Baby Boomer 
generation, that's nothing compared to what's already 
happening. 

So, you've got the senior generation, then you've got 
the Baby Boomers, then you've got those who sort of bridge those 
two, called the Eisenhower generation. By that, if you were 
born when Eisenhower was a general or was president, you're 
considered part of the Eisenhower generation. When I was told 
that, I raised my hand and said, "What if you were born when he 
was a major?" 

And then you've got the technology generations, plural, 
that are marching closely behind. It's a fascinating, demanding 
world. 

We use over 14,000 volunteers in the state of 
California today in our various programs, and there lies the 
salvation to our creativity. As the demand grows, so will the 
volunteers. Our job is to be creative in using them, and that's 
why I'm there. And I ask for your confirmation of that. 

CHAIRMAN LOCKYER: Are there questions from Members? 



1 This may be easy. 

2 MR. ARNETT: Other than the fact that Senator Beverly 

3 says I'm too old for the job. 

4 SENATOR BEVERLY: I said that. 

5 CHAIRMAN LOCKYER: You don't have to plead otherwise. 

6 Presumptively true. 

7 SENATOR BEVERLY: I probably committed some violation 

8 of law. 

9 CHAIRMAN LOCKYER: Senator Ayala. 

10 SENATOR AYALA: Mr. Arnett, reading here, there was a 

11 number of state programs that provide home and community based 

12 long-term care services, such as home health care, personal 

13 care, case management, and meals and so forth. 

14 Is there any way that we should be getting a little 

15 closer together so they're not out in separate programs going in 

16 different directions? Integration of these programs for 

17 long-term care services? 

18 MR. ARNETT: I think, Senator Ayala, if we do our job 

19 right, the amendments we bring you in a month's time to the 

20 Older Californians Act, which, as I say, is a bipartisan effort, 

21 will do that. That'll be the principal contribution, frankly, 

22 that will make — that people who receive the services 

23 themselves will care about. 

24 Beyond that, as you know, the Governor and others have 

25 suggested potential restructurings of the state government, and 

26 restructuring of funding streams. And in my experience, this is 

27 the third time that a major effort at restructuring for purposes 

28 of integration — integrating health and welfare services has 



had that kind of top-down influence. It almost invariably 
requires that. All the efforts of those of us out in the fields 
to try to suggest ways to restructure things don't necessarily 
make it beyond the idea stage unless political impetus is 
there. 

I see that coming, not necessarily as part of these 
amendments that I'm describing, although that will lead to it, 
but there's going to be a huge opportunity for all of us 
together to consider structurally reflecting exactly what you're 
saying. 

SENATOR AYALA: Don't we have the possibility of 
federal funds, that have not been available to us, in years to 
come? Shouldn't we be working on that to make sure that there's 
an overlapping and get the most out of our moneys that we have 
available for that purpose? 

MR. ARNETT: I think perhaps whether one speaks in 
terms of either block grants, which to some is an anathema, or 
whether one speaks in terms of the kind of flexibility that 
would allow a local manager to integrate funding of the kind 
you're talking about, the latter thing, I think, we can do. 
Give the manager, the local manager, in our case the Triple A 
director, a lot more flexibility than he or she now has. And 
that will be part of the amendments that we will bring to you 
for your consideration. 

The added part to that is the merging, if you will, of 
the social and medical models. It's — the money, the big 
money, if you will, is on the health side of the model equation. 
The social side of the equation, which is more my area, is the 



1 smaller side. 

2 Yet, if we do integrated services in a continuum of 

3 care in the manner in which they ought to be done, we would 

4 emphasize the social model before the medical model. In other 

5 words, try to make a person independent enough that going to a 

6 skilled nursing facility is their choice of very last resort, to 
create the kind of independence in a way of life that makes 

8 people have the kind of dignity that they want. They're fearful 

9 of the alternative. 

10 Consequently, if we can integrate these things, both in 

11 the law, and then in the funding streams, and then 

12 structurally — all of which, I think, we have the opportunity 

13 to do over the next two years or so in this state, as has been 

14 done in a number of other states, so we have examples to go by 

15 and we can pick and choose — I think we will set the stage for 

16 the Baby Boomers. We will have gotten ahead of that curve. 

17 SENATOR AYALA: Thank you. 

18 CHAIRMAN LOCKYER: Senator. 

19 SENATOR BEVERLY: I'm prepared to move we recommend 

20 confirmation. 

21 CHAIRMAN LOCKYER: No additional questions. Anyone 

22 present that would wish to comment. 

23 Call the roll, please. 

24 SECRETARY WEBB: Senator Ayala. 

25 SENATOR AYALA: Aye. 

26 SECRETARY WEBB: Ayala Aye. Senator Lewis. 

27 SENATOR LEWIS: Aye. 

28 SECRETARY WEBB: Lewis Aye. Senator Petris. 



SENATOR PETRIS: Aye. 

SECRETARY WEBB: Petris Aye. Senator Beverly. 

SENATOR BEVERLY: Aye. 

SECRETARY WEBB: Beverly Aye. Senator Lockyer. 

CHAIRMAN LOCKYER: Aye. 

SECRETARY WEBB: Lockyer Aye. Five to zero. 

CHAIRMAN LOCKYER: Good luck. 

MR. ARNETT: Thank you. 

CHAIRMAN LOCKYER: Mr. McCaffrey is next, Deputy 
Secretary of Health and Welfare. Good afternoon. 

MR. McCAFFREY: Senator, Members of the Committee/ as 
Senator Lockyer mentioned, my name is Tom McCaffrey. In August 
of 1995, Governor Wilson appointed me to the position as Deputy 
Secretary of the Health and Welfare Agency. I'm here before you 
today to ask for your consent in that appointment. 

Over the past ten years, both my professional, 
education, and my work experience have focused on public policy 
in general, and with the last five years, I've devoted most of 
my time to the health and human services policy issue area. 

Prior to my current position as Deputy Secretary, I 
served as an Assistant Secretary at the Health and Welfare 
Agency from about February of 1994. 

In addition to my years in state government service 
here in Sacramento, I have several years of experience on the 
federal level in the same health and human services issue areas, 
working on both legislative matters and regulatory matters. 
That type of experience in the federal level in this issue area 
is very helpful in my current assignment, being that so many of 



8 

1 the programs under the Health and Welfare Agency's jurisdiction 

2 are programs that are jointly administered by the federal 

3 government and the states. Federal policies and regulations in 

4 these jointly operated programs play a significant role in the 

5 state's exercise of carrying out the programs and policies in 

6 these issue areas. 

7 The health and welfare issue area has long been and 

8 will continue to be perhaps one of the more challenging and 

9 visible policy issue areas facing this state and other states. 

10 I believe my last five years' experience in health and welfare 

11 issues on both the federal and state level, working with members 

12 of this administration as well as federal and state legislative 

13 and program staff, in addition to working with members of 

14 constituency groups who have a direct stake in our programs, 

15 will prove very useful in fulfilling the duties of my current 

16 assignment as Deputy Secretary. 

17 I appreciate the time given to present this brief 

18 statement, and I'm, of course, prepared to answer any questions 

19 the Committee may have of me. 

20 CHAIRMAN LOCKYER: Are there are questions from 

21 Committee Members. 

22 There are a lot of sort of general things that deal 

23 with block grants, and cost of living increases, so on and so 

24 forth. Since I would expect a loyal employee to just repeat 

25 what the Governor says, there's no point in asking those. I've 

26 heard them already. 

27 Other than that, in this current position, what have 

28 you found was the most difficult issue to work with? 



MR. MCCAFFREY: I think in terms of a particular issue, 
or maybe I'd characterize it categories of issues, and that is, 
in my position, we have a lot of — a lot of our activity's 
coordinating issues among departments and working with kind of 
the lead policy contact on agency-wide issues for Finance, for 
the legislative staff, or the Governor's Office. 

I think the most challenging and difficult aspect of my 
assignment is, oftentimes when issues come up to my level, we 
have a limited amount of time to make decisions, and a person in 
my position has not been involved from the ground up on all of 
these issues, and you have a certain amount of information to 
use to make decisions; that oftentimes, I'm a person who likes 
to get involved in details, and gets kind of involved in some of 
the ground-up policy making. So, it's a frustration in dealing 
with that kind of a decision making process. 

CHAIRMAN LOCKYER: So, turf wars? 

MR. MCCAFFREY: Not so much turf wars as it is trying 
to do your best in making decisions with acknowledgment you've 
got limited information and time constraints to make that 
decision. 

CHAIRMAN LOCKYER: Are there questions from Members? 
Senator Beverly. 

SENATOR BEVERLY: Move we recommend confirmation. 

CHAIRMAN LOCKYER: All right, let's call the roll. 
Anyone present that wishes to comment. 

SECRETARY WEBB: Senator Ayala. 

SENATOR AYALA: Aye. 

SECRETARY WEBB: Ayala Aye. Senator Lewis. 



10 

1 SENATOR LEWIS: Aye. 

2 SECRETARY WEBB: Lewis Aye. Senator Petris. 

3 SENATOR PETRIS: Aye. 

4 SECRETARY WEBB: Petris Aye. Senator Beverly. 

5 SENATOR BEVERLY: Aye. 

6 SECRETARY WEBB: Beverly Aye. Senator Lockyer. 

7 CHAIRMAN LOCKYER: Aye. 

8 SECRETARY WEBB: Lockyer Aye. Five to zero. 

9 CHAIRMAN LOCKYER: Good luck. 

10 MR. MCCAFFREY: Thank you. 

11 CHAIRMAN LOCKYER: Mr. Richardson, Ag. Labor. Good 

12 afternoon. 

13 MR. RICHARDSON: Good afternoon. 

14 CHAIRMAN LOCKYER: Do you want to start with some 

15 comment? 

16 MR. RICHARDSON: Yes, please. 

17 Mr. Chairman, Members of the Senate Rules Committee, I 

18 appreciate the opportunity to be here today to answer any 

19 questions you may have. 

20 My own background and experience is that as a criminal 

21 prosecutor, a job I truly loved. Many of the same attributes 

22 required of a good district attorney are those necessary in 

23 order to be a good general counsel, in my opinion. That is, the 

24 individual must have an appropriate measure and balance of 

25 intellect, judgement, common sense, and an instinct for 

26 fairness. 

27 I would add to that a willingness and ability to 

28 enforce the law, and openness and accessibility to the parties, 



11 

and an ability to act decisively. 

Mr. Chairman, I wish to thank Governor Wilson publicly 
for giving me this opportunity to serve in this important 
capacity. 

CHAIRMAN LOCKYER: Two yes, three noes. Keep working 
on it. Next line. 

[Laughter. ] 

MR. RICHARDSON: Thank you. 

I would like to thank as well those in the California 
agricultural community/ both those who are growers and those who 
are farm workers, for their — and their representatives, for 
their frankness and willingness to discuss with me in recent 
months their perspectives, their concerns, and their hopes for 
the future. 

Finally, Mr. Chairman, I wish to thank the men and 
women at the Agricultural Labor Relations Board, both those here 
in our Central Office in Sacramento, and our regional offices in 
El Centro, Visalia, and Salinas, for their patience and 
assistance they've shown me since my appointment last July. 

I wish to thank them as well for their guidance and 
counsel, as I have come to learn the full dimensions of this new 
and important job it's my good fortune to serve. 

I hope to bring to that agency and to serve in such a 
way as to bring credit to them, to the agency and its mission, 
and I wish to pledge to the grower community and the farm worker 
community my pledge to be fair, even-handed and open in my 
dealings with them. 

Thank you. 



12 

1 CHAIRMAN LOCKYER: Thank you, sir. 

2 Is there anyone present that wishes to comment either 

3 for or against the appointment. 

4 How has the work been? Have you been enjoying it? 

5 MR. RICHARDSON: I have. It's a distance from Fourth 

6 Amendment search and seizure to labor and ag. issues, but it's 
been a stimulating challenge, and it has not been a job since 

8 July that has not been without some excitement from time to 

9 time. I'm enjoying it. 

10 CHAIRMAN LOCKYER: What's been hard? 

11 MR. RICHARDSON: I think the thing that's hard, 

12 particularly if you're coming from the venue of criminal 

13 prosecution, is the level of resources that we've got in order 

14 to investigate and — to really investigate and to move cases 

15 along. 

16 We are an agency now with about 49 employees, and there 

17 tends to be lurching effect from compliance work to unfair labor 

18 practice investigation and prosecution. It's essentially 

19 putting out fires as they come up, rather than a systematic 

20 handling of matters that come before us. 

21 CHAIRMAN LOCKYER: So, just the relative thinness of 

22 investigatorial staff in the field as compared to the D.A. type 

23 job? 

24 MR. RICHARDSON: Right. To give you some sense of it, 

25 Mr. Chairman, we are now at a point where, if there is an unfair 
2 6 labor practice charge that is filed, for instance, by a farm 

27 worker group, we send out letters to them, asking them for help 

28 in preparing declarations and bringing the matter to us. 



13 

Generally, if you're a D.A. or prosecutor, you prefer 
having your own people go out, because you can, maybe over time, 
have a better assessment of whether that witness has been 
coached unnecessarily. And you would prefer, in terms of being 
objective about what's happening, to have your own people 
conducting the interview, rather than having either the charging 
party or the charged party giving you declarations they've 
assisted in preparing. 

CHAIRMAN LOCKYER: I guess, looking at our materials, 
there seems to be some backlog of cases where there's uncounted 
ballots and things of that sort. 

Could you maybe paint a fuller picture there? Is that 
something you would get involved in? 

MR. RICHARDSON: That really is any matter regarding 
election, the conduct of elections and overviewing, supervising 
the elections, something that is initially the Board's side 
responsibility, although the General Counsel's staff in the 
various regions, as well as the General Counsels involved in 
that. 

I'm not as familiar with that particular issue. I can 
say that in terms of case statistics and backlog of cases, that 
there has been a need for us to try to address the backlog, 
because, to a certain extent, it hangs like an albatross about 
everything that you're attempting to do now in terms of trying 
to address current issues. 

CHAIRMAN LOCKYER: How much of a backlog do you have? 

MR. RICHARDSON: It's not that much right now, 
frankly. We have — between the time when I was appointed and 



14 



1 April 1st, we went back and reviewed a lot of the material in an 

2 expedited way to try to clear as much of the cases that had just 

3 been sitting around, where either the witness has not appeared 

4 or cannot be located, or some other issue has not been 

5 resolved. Then or now, as with the changeover in General 

6 Counsel, was a good time for me to address those issues and try 
to take some of that burden off of the regional offices. 

8 SENATOR AYALA: Mr. Richardson, the ALRB was founded in 

9 1975. Do you think the intent of the Legislature has been 

10 followed to a good degree, that is, to have peace in the fields 

11 and protection of workers? That's the preamble, as I 

12 understand. Has that been successful in your opinion? 

13 MR. RICHARDSON: I think it has, and I tell you this 

14 as, again, as somebody who has not been familiar with this 

15 venue. But the second or third week I was on the job, there 

16 were a group of strawberry workers who went out on strike down 

17 in Salinas. I went down there for what was an expedited 

18 election. That is, an election which took place in a 48-hour 

19 period. 

20 Our regional office did a very good job preparing that 

21 election, investigating it, conducting it. And as a result, at 

22 least in this instance, we had a group of workers that were very 

23 anxious and concerned about a condition. We had a grower that 

24 was agitated as well. And yet, in that circumstance, we were 

25 able to conduct a representational election. The workers were 

2 6 able to go back to work within a span of four or five days. The 

27 advantage to both the grower as well as the farm worker was 

28 clear, because they were at peak harvest. The farmer could have 



15 

lost his crop. The farm worker could have lost his wage and the 
ability to support his or her family. 

So, in this instance, it brought to me the value of 
this particular agency in trying to get people beyond the 
conflicts that have traditionally plagued this particular 
struggle between growers and farm workers in this state, and it 
has its advantages. 

There are certain — from time to time, there are 
disadvantages. It is costly. But on the whole, I think it has 
allowed the parties to maybe reach a point in 1996 that they've 
never been in, at least in my memory, where I think we are at a 
crossroads of new opportunities for both the grower community as 
well as the farm worker community. 

SENATOR AYALA: Much of the funding was removed by 
Governor Deukmejian for this Board. Has it ever been restored? 

MR. RICHARDSON: Well, I can tell you, we have gone 
from what was an agency that had an excess of 300 employees back 
in the '70s during the Brown administration. I think now we are 
down to about 49 employees. We are doing — and you asked the 
question earlier, Senator, about what is the hard part, and part 
of it is just balancing, knowing what we believe to be the 
intent of the Act, and trying to maintain that, yet, with 
reduced resources makes it difficult. 

But I think we are not seeing as many cases filed. Of 
recent memory, I think there is an alteration in the way in 
which some of the farm worker labor organizations are relating 
to various growers throughout the state, and that is causing, as 
I indicated earlier, new opportunities, I think, for both sides 



16 

1 to, perhaps, usher in a new era of cooperation. It remains to 

2 be seen whether that'll be the case, but there is certainly some 

3 indications that that may be the case. 

4 I think we're doing a pretty good job. Again, the case 

5 numbers are down, as is our number of personnel to address it. 

6 SENATOR AYALA: You went from over 300 employees to 

7 just over 40? 

8 MR. RICHARDSON: About 49. 

9 SENATOR AYALA: The funding has not been restored or 

10 even partially restored? 

11 MR. RICHARDSON: It has not in the sense that in the 

12 General Counsel side of the aisle, I think we have about a $2.4 

13 million budget. In the old days, we had regional offices all 

14 over the state. Of course, those were in the early days of the 

15 agency, and things were being filed right and left, and 

16 complaints were being issued right and left. 

17 Now there is, perhaps, a more deliberate process. 

18 We are also, Senator, and perhaps this is a more direct 

19 answer to your good question, and that is, our work is cyclical, 

20 in the sense that if there is more organizing going on in the 

21 fields, we see more work in terms of unfair labor practice 

22 charges that we must process. Those number of charges have been 

23 down in about the last five to six year period. 

24 But to the extent there is a turn upward, if there is 

25 more active organizing, we will see an increase in the number of 
2 6 charges filed, and we may be hard-pressed to deal with them. 

27 SENATOR AYALA: How many election cases are currently 

28 pending before the Board in which the ballots have been delayed, 



17 

the counting, that is? If so, why are they delayed? What's the 
the problem? 

MR. RICHARDSON: You know, my understanding is, there 
are only three election cases pending before the Board right 
now. 

SENATOR AYALA: Where the ballots have been delayed? 

MR. RICHARDSON: No, I'm not aware of any election 
cases since I've been there, and I can't answer for cases that 
may have gone back some period of time, Senator. 

SENATOR AYALA: What causes these delays? I can't 
understand. Can't the people up there count? 

MR. RICHARDSON: Well, if they're challenged ballots 
that may have — I don't know. I can't answer your question. 

In every election I've seen since I've been there, the 
challenged ballots have not been ones that would have altered 
the electoral outcome. There are certain challenges that are 
filed soon after the election, but I can't speak with any 
certainty. I'd be glad to get back to you. 

SENATOR AYALA: The Board is looking at these issues to 
see that they're streamlining the process so the delays don't 
occur? 

MR. RICHARDSON: I think what you have on the Board 
right now is a Board that has taken the turn-around time on 
elections, it's my understanding, from what was an average of 
about 240 days, to electoral turn-around and review of 40, 41 
days. It is a priority with this particular Board that they 
move those elections quickly. 

There's good reason for it, so that the parties can get 



18 

1 on with collective bargaining if the labor organization were 

2 certified, but I think they've done a very good job prioritizing 

3 election cases. 

4 I don't think right now, Senator, there is any kind of 

5 backlog to speak of that is posing a problem or impediment. 

6 SENATOR AYALA: The General Counsel has the authority 

7 to dismiss some of these cases. 

8 MR. RICHARDSON: Yes, that's correct. 

9 SENATOR AYALA: Does the Board ever review some of the 

10 dismissals to make sure that they follow the law that's supposed 

11 , to be followed? 

12 MR. RICHARDSON: The General Counsel, for better or 

13 worse, has discretion, like a prosecutor, to decide, once a ULP, 

14 or unfair labor practice is charged, whether or not a complaint 

15 will issue. And that decision is nonreviewable by the Board. 

16 SENATOR AYALA: The Board has no authority to overrule 

17 the Counsel? 

18 MR. RICHARDSON: They do not in the area of decisions 

19 regarding unfair labor practices. 

20 They direct my activity in numbers of other areas, but 

21 due to the division, separation of powers, we try to maintain 

22 between the quasi-judicial side of the Board and the prosecution 

23 side, which is the General Counsel's side, there is probably a 

24 good reason for that from the standpoint of checks and balances. 

25 SENATOR AYALA: The Counsel can settle some of these 

26 cases on his own. 

27 MR. RICHARDSON: That's correct. 

28 SENATOR AYALA: You have no authority to look at those 



19 

cases, see if you might disagree with the Counsel? 

MR. RICHARDSON: In regards to Counsel in the regional 
offices, you mean? 

SENATOR AYALA: No, your General Counsel. He can 
dismiss or settle some of these cases. 

MR. RICHARDSON: Right, that's correct. 

SENATOR AYALA: The Board has no authority to review 
his actions at all? 

MR. RICHARDSON: Well, it kind of depends on — all 
settlement proposals go to the Board where there has been a 
sign-off by the regional office and the General Counsel. 

But the General Counsel's role in settlement 
discussions has been delegated from the Board, particularly in 
cases where the case has already gone through, there's been a 
Board order, and now the General Counsel is helping to enforce. 

SENATOR AYALA: The General Counsel is really the 
strong person on that Board, and you Board members, what do you 
do? 

MR. RICHARDSON: Well, I wouldn't want to get in a 
tangle with my Board over that. I think they're strong in a 
sense that they have the final decision regarding the legality. 
On some of it, there are separation of powers issues that 
essentially, Senator, were modeled after the National Labor 
Relations Act, and that separation has worked well. 

SENATOR AYALA: I'm not blaming the Board, because 
probably that's the way the statute reads. I'm not at all, but 
I'm concerned that you folks don't have much to say, really, if 
the Counsel doesn't want you to, the General Counsel. 



20 

1 MR. RICHARDSON: Well, I think that we try to work 

2 cooperatively and respecting each other's responsibilities. 

3 Just as they have authority on cases we take to them to 

4 overrule, as they do, positions taken by the General Counsel in 

5 advocating on behalf of whoever the charging party is, so, too, 

6 the General Counsel has the kind of discretion to say, "Look, 

7 there is simply not enough evidence to go forward." 

8 SENATOR AYALA: The General Counsel is appointed as you 

9 are by the Governor? 

10 MR. RICHARDSON: Yes. 

11 CHAIRMAN LOCKYER: Have you had an opportunity to 

12 develop a philosophy regarding make whole remedies, when they're 

13 appropriate or not? 

14 MR. RICHARDSON: Not really, Senator. That is one area 

15 that I'm trying to learn in the sense, the problem we've had 

16 with make whole is having a statistical base, or a sufficient 

17 number of contracts to compare a given situation to, so we can 

18 make a determination with regard to the make whole remedy. 

19 CHAIRMAN LOCKYER: You haven't had to do one yet? 

20 MR. RICHARDSON: I haven't personally had to do one. 

21 At this point, you rely on staff members whose judgement you've 

22 come to rely on and trust. 

23 CHAIRMAN LOCKYER: There seem to be disputes about 

24 whether they're applicable to unions as well as employers. The 

25 statute seems to say just employers. A matter, I guess, of some 
2 6 dispute, whether good faith bargaining or refusal to bargains 

27 are circumstances in which they're appropriates, and things of 

28 that sort. 



21 



MR. RICHARDSON: That is when the make whole remedy 
would be available, when there has been an allegation of bad 
faith bargaining. 

CHAIRMAN LOCKYER: But if there's refusal to bargain, 
does that count also as bad faith? 

MR. RICHARDSON: I would probably need to defer to 
somebody on that. I don't know the answer to that. 

CHAIRMAN LOCKYER: Other questions, comments from 
anyone? Senator Beverly. 

SENATOR BEVERLY: Move confirmation. 

CHAIRMAN LOCKYER: Call the roll. 

SECRETARY WEBB: Senator Ayala. 

SENATOR AYALA: Aye. 

SECRETARY WEBB: Ayala Aye. Senator Lewis. 

SENATOR LEWIS: Aye. 

SECRETARY WEBB: Lewis Aye. Senator Petris. 

SENATOR PETRIS: Aye. 

SECRETARY WEBB: Petris Aye. Senator Beverly. 

SENATOR BEVERLY: Aye. 

SECRETARY WEBB: Beverly Aye. Senator Lockyer. 

CHAIRMAN LOCKYER: Aye. 

SECRETARY WEBB: Lockyer Aye. Five to zero. 

MR. RICHARDSON: Thank you. 

CHAIRMAN LOCKYER: Good luck, sir. 

[Thereupon. This portion of the 
Senate Rules Committee hearing was 
terminated at approximately 3:07 P.M.] 
— 00O00 — 



22 

1 . V. H i P.TEF 

: 

3 I, EVELYN J. MIZAK, a ...... t ;-, : - .d Reporter of rn e Szaze 

4 of California/ do hereby certify: 

5 That I am a disinterested person herein; that the 

6 foregoing transcript of the Senate Rules Committee hearing was 
reported verbatim in shorthand by me, Evelyn J. Mizak, and 

8 thereafter transcribed into typewriting. 

9 I further certify that I am not of counsel or 

10 attorney for any of the parties to said hearing, nor in any way 

11 interested in the outcome of said hearing. 

12 v IN WITNESS WHEREOF, I have hereunto set my hand this 

13 / / day of /^t^ ^t^^ , 1996. 
14 
15 
16 
17 



19 
20 
21 
22 
23 
24 
25 
26 
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28 






^r:~ EVELYN J. MTZAK /) 
d 'Reporter 



^Z 



Shorthand 'Repoj 



301-R 

Additional copies of this publication may be purchased for $3.00 per copy 
(includes shipping and handling) plus current California sales tax. 

Senate Publications 

1020 N Street, Room B-53 

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(916)327-2155 

Make checks payable to SENATE RULES COMMITTEE. 
Please include Stock Number 301-R when ordering. 



L ^oo 
HI 

/ 1H 
h*> • 1 5" 



("A 



DOCUMENTS DSPT. 

JUN 6 1996 

SmN FR&NC*SCO 
PUBLIC LIBRARY 



HEARING 

x SENATE RULES COMMITTEE 

STATE OF CALIFORNIA 




STATE CAPITOL 

ROOM 113 

SACRAMENTO, CALIFORNIA 

MONDAY, MAY 20, 1996 
2:02 PM 



302-R 



Reported by 



SENATE RULES COMMITTEE 
STATE OF CALIFORNIA 



HEARING 



STATE CAPITOL 

ROOM 113 

SACRAMENTO, CALIFORNIA 



MONDAY, MAY 20, 1996 
2:02 P.M. 



Evelyn J. Mizak 
Shorthand Reporter 



11 



APPEARANCES 

MEMBERS PRESENT 

SENATOR WILLIAM LOCKYER, Chair 

SENATOR ROBERT BEVERLY, Vice Chair 

SENATOR RUBEN AYALA 

SENATOR JOHN LEWIS 

SENATOR NICHOLAS PETRI S 

STAFF PRESENT 

GREG SCHMIDT, Executive Officer 

PAT WEBB, Committee Secretary 

RICK ROLLENS, Consultant on Bill Referrals 

NANCY MICHEL, Consultant on Governor's Appointments 

ALSO PRESENT 

ROBERT P. MARTINEZ, Member 

California Unemployment Insurance Appeals Board 

SENATOR PATRICK JOHNSTON 

ROBERT P. PRESLEY, Chair 
Youthful Offender Parole Board 

ROBERTO P. VELLANOWETH, Member 
Youthful Offender Parole Board 

DOUGLAS W. WILHOIT, JR., Member 
Youthful Offender Parole Board 

LLOYD J. WOOD, Member 
Youthful Offender Parole Board 

MARIO OBLEDO, President 

California Coalition of Hispanic Organizations 



Ill 

INDEX 

Page 
Proceedings 1 

Governor's Appointees: 

ROBERT P. MARTINEZ, Member 

California Unemployment Insurance Appeals Board 1 

Background and Experience 1 

Questions by SENATOR AYALA re: 

Fairness of Current Law 2 

Denial of Some Claims 3 

Support for Raising State Disability 

Weekly Benefits 4 

Source of Money for Payments 4 

Motion to Confirm 4 

Committee Action 18 

PANEL OF NOMINEES TO MEMBERSHIP ON YOUTHFUL OFFENDER 
PAROLE BOARD: 

ROBERT P. PRESLEY, Chair 5 

ROBERTO P. VELLANOWETH, Member 7 

DOUGLAS W. WILHOIT, JR. , Member 6 

LLOYD J. WOOD, Member 7 

Introduction of MR. WILHOIT by SENATOR 

PATRICK JOHNSTON 5 

Questions by SENATOR AYALA re: 

Initial Hearing of Wards 7 

Periodical Review of Ward's Progress 9 

Determination of Programming 9 

Follow-up after Wards Leave YA 10 

Suggested Changes to Improve System 11 

Overcrowding at Youth Authority 13 



IV 



Questions by SENATOR PETRIS re: 

Free Venture Program 15 

Recidivism Rate 15 

Questions by SENATOR AYALA re: 

Relationship between Board and Director 

of Youth Authority 16 

Witness in Support: 

MARIO OBLEDO, President 

California Coalition of Hispanic Organizations 17 

Motion to Confirm All Four Nominees 17 

Committee Action 18 

Termination of Proceedings 18 

Certificate of Reporter 19 



P-R-O-C-E-E-D-I-N-G-S 
— 00O00 — 

SENATOR BEVERLY: First is Robert P. Martinez. Come 
forward, please. 

Would you like to make an opening statement? 

MR. MARTINEZ: A very brief one, Mr. Chairman. 

First of all, thank you very much for this opportunity 
for my consideration to this appointment on the Unemployment 
Insurance Appeals Board. 

I believe that my experience, both in the public and 
private sector, has afforded me an opportunity to work with a 
diverse set of organizations, as well as a diverse set of 
clients, and employers as well as employees. I've worked at the 
community level with community services programs, at the 
federal, state, and local level with senior programs. I've 
administered a number of programs that involve local government 
as well as the state level. 

I very much appreciate the role of the Board as a body 
that adjudicates claims involving an individual's unemployment 
status or disability status, but I also very much appreciate the 
Board's role as policy maker dealing with the Unemployment 
Insurance Appeals Board as an agency. 

I've had the opportunity to visit each of our field 
offices. More importantly, I've had an opportunity to better 
understand just what it is that our administrative law judges 
and our support staff do, day in and day out, in each of their 
respective areas. 

We're involved with a number of projects that deal very 



1 much with the idea of trying to do more, or trying to do better 

2 with less. We're very much involved with a project that will 

3 update our data retrieval and data capacity systems. And I 

4 believe that my experience in dealing with organizational 

5 structures and organizational management is a direct benefit in 

6 our efforts. 

7 I'm ready, willing, and able to answer any of your 

8 specific questions, and again, I pressure this opportunity. 

9 SENATOR BEVERLY: Does any Member of the Committee wish 

10 to ask a question? Senator Ayala. 

11 SENATOR AYALA: Mr. Martinez, do you think that the 

12 current law as written is fair to all parties concerned? If 

13 you'd make changes, what would they be? 

14 MR. MARTINEZ: I do believe that it is a fair system, 

15 because our system, unlike other benefit-type of systems, or 

16 claims systems like the workers' comp. system, basically 

17 believes in the tenet that unemployment insurance is a benefit. 

18 And, but for certain specific kinds of categories, it should be 

19 treated as a benefit. And only in those specific instances 

20 where there is a question about whether or not someone is 

21 eligible for that benefit do we then have a situation where we, 

22 in fact, have to adjudicate. 

23 But for the most part, it is in fact a benefit. It's a 

24 benefit that is actuarily sound, that I think very much takes 

25 into account the capacity of an employer to, in fact, provide 
2 6 resources for this employment insurance benefit. But it also 

27 recognizes that an employee has a right to expect unemployment 

28 benefits. It's only when there's a question about the status 



of an individual being an employee that we really get into 
issues . 

So, I do believe it's a good system. 

SENATOR AYALA: You voted to deny certain cases where 
the law requires it. 

MR. MARTINEZ: That's right. 

SENATOR AYALA: Do you feel comfortable about doing 
that/ denying some of those claims. 

MR. MARTINEZ: Well, at times I do have questions about 
the specific circumstances involved in a specific case. 

But a couple of things have helped me to overcome that 
concern. And I think it's a healthy thing to have that concern, 
because you're dealing with individual's rights, and the 
potential of an individual's benefit, or negating someone's 
benefit. 

First of all, I am one of seven Board members, and I am 
very, very honored to be among company such as Senator Roberti 
and other members that give me an opportunity to learn from 
their experience, and also to better understand what concerns 
them as they deal with a particularly onerous situation. 

But more importantly, we have a very, very professional 
staff, and I believe that our administrative law judges can be 
matched against any administrative law judge. Their capacity, 
their professionalism, is often called to help Board members, 
and I feel very privileged to have that kind of support. 

SENATOR AYALA: The current maximum weekly benefit for 
state disability is $236. There's legislation proposed to raise 
that. 






1 Would you support that type of legislation? 

2 MR. MARTINEZ: Well, I've not had an opportunity to 

3 really to look at that. 

4 SENATOR AYALA: Do you think it's necessary? 

5 MR. MARTINEZ: I think periodically/ this is the kind 

6 ; of thing that does need to be looked at. 

7 What we have to weigh is the capacity of the system to 

8 incorporate an increase, as well as what is necessary for an 

9 individual to survive and to continue to look for employment. 

10 Disability is a little different in that we're dealing 

11 with a different pot, a different resource, and that does 

12 involve a lot of federal intervention as well. 

13 SENATOR AYALA: These moneys come from the employer. 

14 The employee does not contribute; do they? 

15 MR. MARTINEZ: Right, it's strictly out of the 

16 employer's account. 

17 SENATOR AYALA: Employers strictly are the ones. 

18 MR. MARTINEZ: Right. 

19 SENATOR AYALA: Thank you, sir. 

20 SENATOR BEVERLY: Any further questions. 

21 Is anyone here in support of the nomination? Anybody 

22 in opposition? 

23 SENATOR LEWIS: Move confirmation. 

24 SENATOR BEVERLY: We've apparently received no written 

25 opposition. 

2 6 Senator Lewis moves confirmation. Call the roll. 

27 SECRETARY WEBB: Senator Ayala. 

28 SENATOR AYALA: Aye. 



SECRETARY WEBB: Ayala Aye. Senator Lewis. 

SENATOR LEWIS: Aye. 

SECRETARY WEBB: Lewis Aye. Senator Petris. 

SENATOR PETRIS: Aye. 

SECRETARY WEBB: Petris Aye. Senator Beverly. 

SENATOR BEVERLY: Aye. 

SECRETARY WEBB: Beverly Aye. Senator Lockyer. Four 



to zero 



SENATOR BEVERLY: Ayes four to zero. We'll leave the 
roll open. 

Congratulations/ sir. 

MR. MARTINEZ: Thank you very much, Mr. Chairman and 
Members. 

SENATOR BEVERLY: The next four Governor's appointees 
are all membership on the Youthful Offender Parole Board. I 
would ask that all four of the nominees come forward. We'll 
hear them together. 

Two of you look very familiar. 

Senator Johnston, I understand you wish to introduce 
one of the nominees. 

SENATOR JOHNSTON: Yes. First I'd like to ask Senator 
Presley to Chair the Appropriations Committee. They're not 
doing what I want, Bob, and to introduce — 

[Laughter. ] 

SENATOR LEWIS: Not as far as I was 
concerned. 

SENATOR JOHNSTON: ~ and to introduce Mr. Wilhoit, who 
is a constituent, a friend of mine, a former county supervisor, 



1 long career in law enforcement, and an able, dedicated public 

2 servant both at local government and now for the state. 

3 I would hope that he would merit your consideration and 

4 support for confirmation. 

5 SENATOR BEVERLY: Thank you very much. 

6 SENATOR AYALA: Can we have a division of the question 

7 and have Senator Presley by himself? 

8 [Laughter. ] 

9 SENATOR BEVERLY: Let me call upon the nominees, 

10 beginning our left. Would any of you like to make an opening 

11 statement? Senator Presley. 

12 SENATOR PRESLEY: I'm amazed at how your sins catch up 

13 with you so fast here. 

14 SENATOR BEVERLY: I'm still getting your mail, by the 

15 way. 

16 SENATOR PRESLEY: As long as you don't get my rain 

17 coat. 

18 I don't know if any of us have an opening statement, 

19 Mr. Chairman. I think we are prepared to answer any questions 

20 and give you a feel for the Youthful Offender Parole Board and 

21 what it does. 

22 I have a brief outline of it here, if anyone wants to 

23 go into it in that depth. 

24 We have three very well-qualified members here 

25 which I've delegated to answer all the questions. 
2 6 [Laughter.] 

27 SENATOR BEVERLY: Let's have you identify yourselves. 

28 MR. WILHOIT: My name is Douglas Woodrow Wilhoit, 



Junior. 

MR. VELLANOWETH: My name's Roberto P. Vellanoweth. 

MR. WOOD: Lloyd Wood. 

SENATOR BEVERLY: Does any Senator have a question for 
any of the members? 

SENATOR AYALA: I have a question, Mr. Chairman. 

If an offender comes before the board initially for the 
first hearing, what it is that you look for in order to 
determine how this offender's going to be treated? 

MR. WILHOIT: As Senator Presley said, he's delegated 
that. Since I'm the first one, I'll take a stab. 

It's called an initial hearing. And every ward that 
comes into the system after it goes through the juvenile or 
superior court comes to the Youth Authority, either the Northern 
Clinic or the Southern Clinic. The Northern Clinic is in 
Sacramento. The Southern Clinic is down in Southern California 
in Whittier. 

And they are there approximately at least 45 days, 
going through all kinds of medical, physical tests, 
psychological tests to find out where they are education-wise, 
what level. And we get them as low as first or second grade 
reading level, math. 

The entire report is put together, and then it comes 
before — an individual board member does the initial hearing. 
And what we have, in a rather short period of time, we're 
looking at that. Right now, we handle 18 cases a day. I think 
all of us agree with 18 cases, to do justice to young these 
young people, whether they be young men or young women, is not 



8 

1 enough time. We don't have enough time, because we should take 

2 at least half an hour. But at 18 cases, you only get maybe 

3 15-20 minutes to go through all the documentation, to find out 

4 -- look to read about their crime, their personal background, 

5 their psychological background, educational background, and the 

6 recommendations of staff for their needs. 

7 SENATOR AYALA: When is this done? Is it done as soon 

8 as the court -- 

9 MR. WILHOIT: It's approximately 45 days after they're 

10 sent. 

11 SENATOR AYALA: To the Youth Authority facility itself? 

12 MR. WILHOIT: Yes, sir. We go right — either the 

13 Northern Reception Center here in Sacramento, or the one in 

14 Southern California. Mr. Wood is the Southern California 

15 ' representative. He does a lot of it there, but it's all the 

16 same. It's within 45 days we must have that particular initial 

17 hearing. Again, it's due process. 

18 And then we make a determination, looking at the — 

19 interview the young man or the young lady, look at the staff 

20 recommendation. We also not only determine which facility 

21 they're going to go to, what's their best need, depending on 

22 their age, whether they be 12, 13, 14, or 18 years old. We can 

23 take them up to 25 in Youth Authority. 

24 And we determine which is best facility to go to. If 

25 they're a sex offender, or a crime against property, or a crime 

26 against person. And each individual school, as we call them — 

27 and there are 13 around the state, 4 in Stockton, the rest 

28 around the state — and we determine which school to go to. 



Could be the LEAD program, which was started by Senator Presley, 
which the entire Assembly and Senate, and signed by the Governor 
several years ago, which is a program where you use a short-term 
program. 

Then we decide the length also, by our rules, the 
length of time. A judge may, for example, for an assault with a 
deadly weapon, may give a term of eight years. But if there's 
no bodily injury with our scale, that might only be what's 
called a category three, which is three years in Youth 
Authority. So, we give them those three years. We might add 
another six months if we feel there was some other aggravation 
involved, or some other injury involved, but not enough to make 
it a category two. Then we send them to that facility for that 
amount of time for both the training and the treatment. 

SENATOR AYALA: After the official meeting with the 
ward, you periodically meet with them again to see what progress 
they're making? 

MR. WILHOIT: Yes, sir. By law, every year, every ward 
in the Youth Authority must have an annual review, and that is 
done by the seven of us, including retired annuitants and board 
reps. 

SENATOR AYALA: You determine that for a period of time 
whether he should continue in that program or another program? 
Do you make a determination as well? 

MR. WILHOIT: It's a cooperative thing. If the staff 
comes at the annual review, comes with a review of the year 
before, look at disciplinary actions, if there's been a good 
record, if he or she has — let me go back. 



10 

1 We assign certain programs they must take: the sexual 

2 offender program; a formal-informal drug program; crimes against 

3 women program; young men as a father program; all these 

4 different programs. As they complete those, staff will come and 

5 say, "This last year, Ward A has completed this, this, and this, 

6 and we don't have the programs in this facility to add to his 
further training and treatment, so we recommend that he or she 

8 be sent to another facility." It may be, for example, if a 

9 young man's at Karl Holton, which is primarily a drug program, 

10 they do informal drug program there. They've completed that, 

11 but they have no job skills. They'll say, "Would you approve or 

12 agree to a transfer to Dewitt Nelson, which is also in Stockton, 

13 for some job training programs, some kind of a trade." 

14 SENATOR AYALA: Do many of these young folks end up in 

15 the prison system, where they graduate to an adult prison? 

16 MR. WILHOIT: Unfortunately. 

17 SENATOR AYALA: Any follow-up on these young people 

18 after they leave the Youth Authority? 

19 MR. WILHOIT: They're on parole, and that's hoping 

20 parole will keep a track on them, and keep them from falling 

21 back into the error of their ways. I think all of us agree — 

22 and I don't want to take the whole mike; turn to my colleagues 

23 — that the Youth Authority and the Youth Authority Parole Board 

24 get these young people once the early system — they have either 

25 failed in the early system, the early system or society has 

26 failed them. And they actually have no — are not amenable to 

27 treatment within the local jurisdictions. 

28 This is where I see personnel — I'll turn it over 



11 

shortly to my colleagues — I see a short coming that has 
developed over last several years. There are three missions of 
the Youth Authority. We fall into that. 

I must say in defense of Senator Presley, if I may, 
from the very beginning, the relationship up until last 
September between the California Youth Authority and the YOPB 
has been poor at best. There were a lot the personal issues 
going on. When Craig Brown was made the Director, and Senator 
Presley made the Chairman of the Board, it became a very 
cohesive unit, working together to reach the goal of the Youth 
Authority. 

That goal is really three-fold. Number one, the 
protection of the public. Number two, the training and 
treatment of the wards to be prepared to go back into society. 

But another component I think is really missing at this 
point — and this is not so much directly with the Youth 
Authority but it affects us to your question, Senator Ayala — 
is, the Youth Authority working with local jurisdictions to 
prevent crime. 

Prevention efforts are a lot less expensive than 
intervention efforts. Over the last five or six years, that has 
been lacking, that cooperation at work between the Youth 
Authority to help local governments to prevent crimes so that we 
don't get the youthful offenders in the Youth Authority to begin 
with. 

SENATOR AYALA: If any of you folks have any changes to 
make, what would they be to improve the system? 

MR. VELLANOWETH: Roberto Vellanoweth. 



1 If I may add, just to piggy-back, the most important 

2 element, in my opinion, that we could add is in the school 

3 system itself. I notice that my colleagues — 

4 SENATOR AYALA: Local schools? 

5 MR. VELLANOWETH: The local schools and the public 

6 schools, to be more exact, because the private schools are doing 
a pretty good job with the kids. They have a captive audience. 

8 But the public schools, and specifically in the junior 

9 high and the elementary schools, that's where I believe the 

10 problems really start: the gangs, the drugs, and then getting 

11 into the streets becomes part of their life-style. 

12 And the parents are, in my opinion, the ones that have 

13 to be really taking responsibility for those wards, for those 

14 kids. 

15 We need to, as Mr. Wilhoit stated, we need to really 

16 get into the community programs and try to assist the parents as 

17 well as the kids to make a better life for themselves. But we 

18 need to have a whole bunch of role models out there. And I 

19 think that's what very important and missing, in my perspective. 

20 I was talking to Senator Ayala before about what I saw 

21 happen. As a prior teacher, I saw a lot of opportunities, back 

22 in the early '70s, teaching at Goethe Junior High School — one 

23 of the -- you know, a real tough area of Sacramento — and they 

24 had sports programs, they had educational extra-curricular 

25 programs and activities. Then Proposition 13 hit us, as you all 
2 6 know, and all of these programs all of a sudden went by the 

27 wayside. 

28 What it amounts to is more money. That's basically the 



13 

responsibility, I think, of all of us, to take responsibility 
for those kids by providing them with more resources. 

SENATOR AYALA: One more question, the adult prison 
system is above capacity now over the state. 

Has that also been experienced at the Youth Authority 
level, crowded conditions? 

MR. VELLANOWETH: Let me answer that, if you don't 
mind, Doug. 

We have noticed that the increase in youth, compared to 
the decrease — because, if you look at the latest figures from 
the United States, it says that we're having a — the crime 
rates are going down in the adult population, but they're 
increasing in the youth population. 

So, we're going to be experiencing growth, while the 
prison systems in general are going to be experiencing a 
downward — I guess a downward population. 

SENATOR AYALA: When do you predict that's going to 
happen? 

MR. VELLANOWETH: That's a good question. 

MR. WILHOIT: If I may on that, Senator. 

I know last year during the budget year, there were 
requests for 1500 more beds for the Youth Authority, and I think 
that was authorized but the funds were not allocated. I think 
that was up again this year. There is definitely a need for 
more beds . 

But from my perspective looking at this, and I have a 
short period of time, although I was on the Citizen's Committee 
for the Northern California Youth Center for a number of years, 



14 

1 when I was on the San Joaquin Board of Supervisors, having four 

2 facilities in Stockton, it was very convenient. 

3 But I had a respect, I've really grown a great deal of 

4 respect for the staff of the Youth Authority, the everyday 

5 staff, the line staff, the correctional officers, the youth 

6 counselors, the parole officers, who work in the servant — 
those are the ones who are dedicated who are really, I think, 

8 when Patrick -- and I was very honored that he introduced me as 

9 a dedicated public servant. Those are the ones that are 

10 dedicated, with the lowering of the resources, the increase of 

11 the bodies, yet their dedication and their work ethic has 

12 increased ten-fold to try and serve these young people. They're 

13 the ones that need the resources and the programs. 

14 I think a real example that we're seeing of a program 

15 that we as Board members are going to work with the Youth 

16 Authority on is a pre-parole program, like we have in Paso 

17 Robles. It's the Cuyucas Hall, to really prepare the young 

18 people to go out on parole. 

19 Right now, a young man might come before us out of 

20 lockup, and he may be out of what's called the actual 

21 confinement time. We don't have much choice about paroling; 

22 that's one of the hearings we hear, too, is actual parole 

23 hearings. He or she is not prepared to go on the street, but 

24 yet because of the law, we have to let them out. 

25 If there were a program where they could house these 

26 kids, and give them some skills, pre-parole, for, say, even six 

27 to eight weeks before their parole, it would help. But there's 

28 not the funds. 



15 

So, there are needs like that. It's not all just 
lockup; it's program monies that are needed. 

SENATOR AYALA: I have no more questions, Mr. Chairman. 

SENATOR BEVERLY: Any Member of the Committee have any 
further questions? Senator Petris. 

SENATOR PETRIS: For any of the members, what is free 
venture program? 

MR. WOOD: A good example of the free venture program 
is the TWA program up in Ventura, where Ventura — actually, the 
wards of Ventura will be trained to work in being ticket 
people. And actually, sometimes when you call for reservations 
for TWA, you're probably talking to a ward at Ventura School. 

And so, the free venture program trains them to do this 
type of thing. They also pay them. I don't remember the 
percentages, but a percentage of what they make goes into the 
Victims Fund, a percentage goes into paying for their upkeep, 
and then a percentage they get to keep. 

In some of your cases where you have a person committed 
for murder, and they'll do the seven years, and do it at 
Ventura, we've had some cases where they have left Ventura 
School with a Bachelor's degree, $10,000 in cash from TWA, and a 
guaranteed job. 

So, there are a few. There's that one, then there's a 
couple more down in YTS that deal with the assembly of parts and 
manufacturing certain things. 

SENATOR PETRIS: Does that cut the recidivism rate? 

MR. WOOD: I don't know. I don't have any figures on 
recidivism that I could quote. The Youth Authority would 



16 



1 compile those. 

2 MR. WILHOIT: If I may, Senator, on that one. 

3 When our whirlwind tour, when I first was appointed in 

4 September, we spent some time in Southern California. If I 

5 remember correctly, the recidivism rate in Youth Authority is 

6 about 48 percent, roughly. In the free venture program, it's 
about 23 percent, and that's rough figures. That's from just 

8 memory, sir. So, it is much more successful. 

9 SENATOR PETRIS: Thank you. 

10 Question, do these three gentlemen get to vote on 

11 whether Presley gets approved or not. 

12 [Laughter.] 

13 SENATOR BEVERLY: Just total unity. 

14 SENATOR PETRIS: I'll withdraw the question. 

15 SENATOR BEVERLY: Any further questions? 

16 SENATOR AYALA: One more question. 

17 What is the relationship between the Board and the 

18 Director of Youth Authority? What is the relationship? Do you 

19 meet with him daily, weekly, monthly? 

20 SENATOR PRESLEY: Would you believe, the law requires 

21 that we meet four times a year. It's in the law. 

22 That was a shock to me, that it was in the law that the 

23 Youthful Offender Parole Board and the California Youth 

24 Authority, the higher eschelon people and the Board members, are 

25 required by law to meet four times a year. But in fact, we meet 

26 often. 

27 SENATOR AYALA: Do you give directions to the Director, 

28 or do you just sit? 



17 

SENATOR PRESLEY: It's just a — the Board and the 
Department are on the same level. It's a coordination thing 
between the two. 

SENATOR AYALA: You exchange views, but there's no 
authority, one over the other? 

SENATOR PRESLEY: That's right. 

SENATOR BEVERLY: Is there anyone present who wishes to 
testify in support of the nominees, or any one of them? Come 
forward. 

SENATOR PRESLEY: Mr. Chairman, I think everybody in 
the room's in support. 

MR. OBLEDO: My name is Mario Obledo, President of the 
California Coalition of Hispanic Organizations. 

We support all the nominees, specifically Senator 
Robert Presley and Mr. Roberto Vellanoweth. They're both 
distinguished and capable individuals. 

Thank you. 

SENATOR BEVERLY: Thank you, Mr. Obledo. 

Anybody else. 

Is there any opposition? The record will reflect that 
there is no opposition present, and none has been received in 
writing. 

What's pleasure of the Rules Committee? 

SENATOR AYALA: What kind of a motion, for all four? 

SENATOR BEVERLY: You can move all four, then we'll 
vote. 

SENATOR AYALA: I'd like to move confirmation of all 
four candidates. 



18 

1 SENATOR BEVERLY: Call the roll on Senator Presley. 

2 SECRETARY WEBB: Senator Ayala. 

3 SENATOR AYALA: Aye. 

4 SECRETARY WEBB: Ayala Aye. Senator Lewis. 

5 SENATOR LEWIS: Aye. 

6 SECRETARY WEBB: Lewis Aye. Senator Petris. 

7 SENATOR PETRIS: Aye. 

8 SECRETARY WEBB: Petris Aye. Senator Beverly. 

9 SENATOR BEVERLY: Aye. 

10 SECRETARY WEBB: Beverly Aye. Senator Lockyer. Four 

11 to zero. 

12 SENATOR BEVERLY: Ayes four- zero. We'll hold the roll 

13 open for the Chairman. 

14 CHAIRMAN LOCKYER: Lockyer Aye. 

15 SECRETARY WEBB: Lockyer Aye, five to zero. 

16 SENATOR BEVERLY: On Senator Presley, the motion is 

17 five-zero. 

18 Without objection, the same vote will be recorded for 

19 the other nominees. 

20 Thank you, gentlemen. Congratulations. 

21 CHAIRMAN LOCKYER: On Mr. Martinez, if I may add myself 

22 on to make it five-zero. Thank you, Senator Beverly and 

23 Members. 

24 [Thereupon. This portion of the 

25 Senate Rules Committee hearing was 

26 terminated at approximately 2:27 P.M.] 

27 — ooOoo — 
28 



19 



CERTIFICATE OF SHORTHAND REPORTER 

I, EVELYN J. MIZAK, a Shorthand Reporter of the State 
of California, do hereby certify: 

That I am a disinterested person herein; that the 
foregoing transcript of the Senate Rules Committee hearing was 
reported verbatim in shorthand by me, Evelyn J. Mizak, and 
thereafter transcribed into typewriting. 

I further certify that I am not of counsel or 
attorney for any of the parties to said hearing, nor in any way 
interested in the outcome of said hearing. 

IN WITNESS WHEREOF, I have hereunto set my hand this 
o///tf/ day of 





^>^ 



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^HEARING 

„ SENATE RULES COMMITTEE 
^/ //// 

STATE OF£ALIFORNIA 




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SACRAMENTO, CALIFORNIA 

MONDAY, JUNE 3, 1996 
1:57 P.M. 



303-R 



SENATE RULES COMMITTEE 
STATE OF CALIFORNIA 



HEARING 



STATE CAPITOL 

ROOM 113 

SACRAMENTO, CALIFORNIA 



MONDAY, JUNE 3, 1996 
1:57 P.M. 



Reported by 



Evelyn J. Mizak 
Shorthand Reporter 



11 



APPEARANCES 

MEMBERS PRESENT 

SENATOR WILLIAM LOCKYER, Chair 

SENATOR ROBERT BEVERLY, Vice Chair 

SENATOR RUBEN AYALA 

SENATOR JOHN LEWIS 

SENATOR NICHOLAS PETRIS 

STAFF PRESENT 

GREG SCHMIDT, Executive Officer 

PAT WEBB, Committee Secretary 

RICK ROLLENS, Consultant on Bill Referrals 

NANCY MICHEL, Consultant on Governor's Appointments 

ALSO PRESENT 

BENJAMIN G. DAVIDIAN, Member 

Alcoholic Beverage Control Appeals Board 

MARTIN B. DYER, Member 

Public Employment Relations Board 

MICHAL C. MOORE, Member 

State Energy Resources Conservation and Development Commission 

JOSIAH L. NEEPER, Member 
Public Utilities Commission 

SENATOR STEVE PEACE 

SALLY A. RAKOW, Member 

State Energy Resources Conservation and Development Commission 

SENATOR HERSCHEL ROSENTHAL 



Ill 

INDEX 

Page 
Proceedings 1 

Governor's Appointees: 

BENJAMIN G. DAVIDIAN, Member 

Alcoholic Beverage Control Appeals Board 1 

Questions by CHAIRMAN LOCKYER re: 

Current Responsibilities 1 

In-house Administrative Hearing Procedure 2 

Most Contentious Issue 3 

Issues Involving Drugs 4 

Expectation that Quantity of Appeals 

Will Grow 4 

Hearing Locations 6 

Questions by SENATOR AYALA re: 

Number of Hearings per Year 7 

Most Appeals Come from Los Angeles Area 7 

Questions by SENATOR LEWIS re: 

Hearings on Both Sides of Issue 8 

Percentage that Board Find in Favor 
of Licensee in Complaints regarding 
Overconcentration of Licenses 8 

Questions by SENATOR PETRIS re: 

Problem with Dancers in Bars 10 

Questions by SENATOR AYALA re: 

Restrictions on Exotic Dancing 11 

Questions by CHAIRMAN LOCKYER re: 

Work History 12 

Position Held after Leaving FPPC in 

January, 1995 13 

Meaning of "Of Counsel" with Law Firm 14 



IV 



11 



Possible Conflict with Former Chair 

of FPPC handling Legal Matters for 

Law Firm's Clients which May Relate 

to FPPC 14 

Number of Clients Whose Cases Involved 

FPPC 15 

FPPC Revolving Door Policy 15 

Administrative Actions of FPPC 

Versus Enforcement Cases 16 



Currently Still "Of Counsel" with 

Law Firm 18 

Rules with Respect to Clients the Law 
Firm is Allowed to Handle that Might Have 
10 Issues with Alcoholic Beverage Control 19 



Motion to Confirm 19 



Questions by CHAIRMAN LOCKYER re: 



12 Committee Action 19 

13 MARTIN B. DYER, member 
Public Employment Relations Board 20 

14 

15 

Exemption of Charter Schools from 

16 Collective Bargaining Laws 20 

17 Any Problems that Legislature 

Needs to Re-examine relating to 

18 Basic Codes Governing Board's Activities 23 

19 Questions by SENATOR AYALA re: 

20 Most Pressing Issues before Board 

Presently 24 

21 

22 
23 
24 

Appropriateness of Binding Arbitration 

and Right of Public Employees to Strike 25 

26 Motion to Confirm 26 

27 Committee Action 26 

28 



Case Backlog 24 

Questions by CHAIRMAN LOCKYER re: 

Time Needed to Issue Decisions 24 



MICHAL C. MOORE, Member 

State Energy Resources Conservation and 

Development Commission 26 

Background and Experience 26 

Questions by CHAIRMAN LOCKYER re: 

Commission's Role in Current 

Discussion and Orders from PUC relating 

to Electrical Restructuring 28 

Options Open to Commission 29 

Questions by SENATOR AYALA re: 

Possible Duplication of Responsibilities 

between Energy Commission and PUC 30 

Competition between Energy Commission and 

PUC in Area of Power Plants 31 

Developing New Relationship with Far East 

with regard to Energy Resources 31 

Questions by SENATOR LEWIS re: 

Number of Power Plants Sited by 

Commission in Past Year, Past Five Years 32 

Principal Responsibility of Commission 32 

Principal Considerations in Siting 

New Power Plants 33 

Questions by SENATOR PETRIS re: 

Studies on Golf Courses and Land 

Development Models 33 

Recommendations on Open Space 36 

Impact of Williamson Act on Monterey County ... 36 

Agricultural Easements 37 

Questions by CHAIRMAN LOCKYER re: 

Emphasis or Significance of Work in 

Renewable Energy Sources or Energy 

Efficiencies at Commission 37 

Questions by SENATOR PETRIS re: 

Definition of "Willingness to Pay" 38 



VI 



Introduction by SENATOR STEVE PEACE 41 

Questions by SENATOR AYALA re: 



Questions by SENATOR AYALA re: 

Involvement with County of San Bernardino 

in Willingness to Pay Survey 40 

4 Agricultural Preserve 40 

Motion to Confirm 41 

t, Committee Action 41 

JOSIAH L. NEEPER, Member 

Public Utilities Commission 41 

8 

9 
10 

Problems with Getting Public Input at 

1 1 Public PUC Hearings 45 

12 Position on SCA 21, Direct Election of 

PUC Commissioners 48 

Need to Consolidate PUC and Energy 

14 Commission * 50 

15 Questions by CHAIRMAN LOCKYER re: 

16 Judicial Review of PUC Decisions 51 

17 Modification of Policy Decisions 54 

18 Appropriateness of District Courts of 

Appeal Reviewing PUC Decisions 55 

19 

20 

Impact of Restructuring on Current 
Program for Lower Rates for Low-Income 
Households 57 

Competition, or Its Lack, Part of 

Current Drive for Restructuring, and 

Impact on Consumers 58 

Legitimacy of Criticism that California's 

25 Rates are Highest in Nation 60 

26 Questions by SENATOR AYALA re: 

Making Utilities with Franchises 

Competitive 61 

28 



Questions by SENATOR PETRIS re: 



Vll 



Questions by CHAIRMAN LOCKYER re: 

Technological Feasibility of 

Direct Access 62 

Recapturing Stranded Costs 64 

Experience of Other States with 

Stranded Costs 65 

Argument that Labor Charges Are Form 

of Stranded Costs 66 

Ex-Parte Rules 67 

Need for Ratepayers' Advocate, 

External or Internal 68 

Complaints about Winter Power Outage 70 

Motion to Confirm 71 

Committee Action 71 

SALLY A. RAKOW, Member 

State Energy Resources Conservation and 

Development Commission .72 

Introduction by SENATOR HERSCHEL ROSENTHAL 72 

Background and Experience 73 

Questions by CHAIRMAN LOCKYER re: 

Examples of Opposition to Standards 

in which Benefits Do Not Out Weight Costs 74 

Energy Savings in Past 15 Years , 75 

Controversial Power Plant Siting 

Cases 76 

Motion to Confirm 78 

Committee Action 79 

Termination of Proceedings .79 

Certificate of Reporter 80 



P-R-O-C-E-E-D-I-N-G-S 
— 00O00 — 

CHAIRMAN LOCKYER: Mr. Davidian is first then. 

MR. DAVIDIAN: Good afternoon, Senator. 

CHAIRMAN LOCKYER: Do you want to start with any kind 
of opening about what you've been doing in life, and why this 
job is interesting? 

MR. DAVIDIAN: If I tell you about all the things I've 
been doing in life, I'm not going to get out of here in very 
good shape. 

CHAIRMAN LOCKYER: You seem to be an all-purpose 
hitter. 

MR. DAVIDIAN: This is actually an enjoyable job I have 
now. It was the first of all of them. 

CHAIRMAN LOCKYER: Fair Political Practices, or ag. 
labor? 

MR. DAVIDIAN: I enjoyed them immensely. They're 
wonderful places to be from. 

CHAIRMAN LOCKYER: What are your responsibilities? 

MR. DAVIDIAN: The Alcoholic Beverage Control Appeals 
Board really acts sort of as an administrative court of appeals. 
If an entity that has a liquor license has a problem, and the 
ABC has a difficulty with them, it will go before an 
administrative law judge. If one party or the other doesn't 
like what came out of that hearing, the matter comes up to the 
ABCAB, and we listen to any argument and review the briefs much 
like an appeals court. 

It's an interesting issue. And some of the hearings, 



1 well, I was just commenting to some staff that are present here 

2 today that a couple of the hearings should almost have been 

3 X-rated. The breadth of issues that are involved in the liquor 

4 licensing board, as far as topless bars and liquor stores, so on 

5 and so forth, you see quite a broad cross section of California 

6 come into those hearings. 

We have a lot of issues where petitioners or people are 

8 protesting the placement of a liquor license in a neighborhood 

9 near a school, near a church, and so on and so forth. So, there 

10 are many issues that come before us. 

11 CHAIRMAN LOCKYER: Almost one out of five, it looks 

12 like from looking at the numbers. Of the administrative 

13 rulings, almost a fifth of them get appealed. 

14 MR. DAVIDIAN: That's my understanding. 

15 We've got quite a work load. In fact, we were just 

16 looking. I think we have eleven cases in Sacramento day after 

17 tomorrow. We have seventeen or eighteen in Los Angeles in July, 

18 and eighteen in August. So, it's a full day when you stack them 

19 up like that. 

20 More often than not, an attorney will appear on behalf 

21 of the petitioner, and they'll file briefs. 

22 CHAIRMAN LOCKYER: I note that I guess there's been a 

23 decision to have more of an in-house administrative hearing 

24 procedure, rather than rely on the State Office of 

25 Administrative Hearings for the initial — 

26 MR. DAVIDIAN: The initial part would be handled by the 

27 ABC itself before it gets up to the Appeals Board. 

28 CHAIRMAN LOCKYER: Is there something that persuades 



people that that will be more efficient, or do you get a 
different result than going through the Office of Administrative 
Hearings? 

MR. DAVIDIAN: I have to say I'm not really prepared to 
discuss that because that would be down at the ABC level before 
it would get to us. 

CHAIRMAN LOCKYER: So, they haven't mentioned it. 
That's not part of your job to do that. 

MR. DAVIDIAN: That's right. 

CHAIRMAN LOCKYER: Are there questions from Members. 

What are the kinds of issues that seem to take the bulk 
of the time, or are the most contentious that you get? Are 
there repeating issues, sort of, or no? 

MR. DAVIDIAN: Well, you'll have problems like, if a 
member — if a person with a license associates with somebody 
else who has a problem with the law, a crime of moral turpitude, 
the license is, of course, at that point then called into 
question, because that's not what you want to have. 

So, we've had a number of times in the last several 
months where one of the licensees will suddenly find themselves 
involved in dealing some drugs, or receiving stolen property, 
that type of thing. And then, of course, we start talking about 
revocation of the license, and the other partners don't like 
that very much, and so, that can be a problem. 

One of the problems we've had a lot lately are these 
juice bars, and so forth. Theoretically, if they're — if 
there's going to be complete nudity, you can't have alcohol 
served there. And so, what they have is, they have licensees 



1 that have -- 

2 CHAIRMAN LOCKYER: Wrestlers? 

3 MR. DAVIDIAN: Yeah, all sorts of — 

4 CHAIRMAN LOCKYER: I think we had mud wrestlers in my 

5 area that was big problem or something. 

6 MR. DAVIDIAN: They're wrestling in any number of 
mediums at this point, Senator. It's — well, we don't want to 

8 get into all of them. 

9 You see, when they have — they have a certain amount 

10 of nudity allowed, but when they go beyond a certain level, then 

11 it becomes an issue on the license or the expansion of a — 

12 CHAIRMAN LOCKYER: Do you actually hear many complaints 

13 like that? 

14 MR. DAVIDIAN: Yes, we do. We get those, I'd say, 

15 about once a month, couple times every three months, something 

16 like that. 

17 CHAIRMAN LOCKYER: How about where there's been the 

18 drug or stolen property? How often do those come up? 

19 MR. DAVIDIAN: We see at least one or two of those a 

20 month. Then we'll have problems with assemblies of unsavory 

21 characters around a liquor store kind of a thing. That's a 

22 fairly common issue. And then petitioners who don't want to see 

23 a liquor license to a convenience store when there's one a block 

24 away, or there's a church there, a school there, that type of 

25 thing. That's fairly common as well. 

2 6 CHAIRMAN LOCKYER: Now, I guess there's some 

27 anticipation that your appeals, the quantity of appeals is 

28 likely to grow. Is that what they're expecting to have happen? 



MR. DAVIDIAN: My understanding is that one could 
probably expect that that will continue. 

When I first started about eight months ago, it was 
common to have eight, nine or ten, and all of a sudden, we're in 
the fifteen, sixteen, eighteen. 

CHAIRMAN LOCKYER: At each meeting? 

MR. DAVIDIAN: Yes, at each meeting. And that makes 
for a full day, because if they send their attorneys, then of 
course we'll have oral argument and the briefs. We'll have 
briefs stacked up like that for one meeting. 

CHAIRMAN LOCKYER: We're preparing you for your next 
assignment on the Court of Appeals. 

[Laughter. ] 

MR. DAVIDIAN: No comment. I don't look good in a 
black dress, Senator. 

CHAIRMAN LOCKYER: You're not into cross-dressing? 

MR. DAVIDIAN: I don't think it would work. 

CHAIRMAN LOCKYER: Is there anything anyone has talked 
about as a way of handling all those anticipated growth in 
appeals? 

MR. DAVIDIAN: We really — no one's addressed that to 
me. 

CHAIRMAN LOCKYER: Work you harder. 

MR. DAVIDIAN: We just do whatever comes along, and the 
stack just seems to grow. 

I think it is a bit cyclical. 

We're now trying a process where, instead of just 
holding the hearings in San Francisco and Los Angeles, which is 



1 what they've been doing for some period of time, we're trying to 

2 help out some of the petitioners who have to travel a great 

3 distance, and we're holding the hearings a little closer in some 

4 of the more local communities, more centralized locations in the 

5 valley, or in Orange County, or wherever, to try to make it a 

6 little easier for them to get there, and for some of their 
attorneys to get there, because it costs them a great deal of 

8 money to have to send an attorney from Fresno to San Francisco, 

9 for example, to appear on a hearing. So, we will try to bring 

10 the hearings to them when we can reasonably do that. 

11 CHAIRMAN LOCKYER: How often do you move them around 

12 like that? 

13 MR. DAVIDIAN: Well, we're just trying to experiment a 

14 little bit with that. In fact we're having our first meeting in 

15 Sacramento this week. Usually it's either — it's two months in 

16 L.A. then once in San Francisco, and two months in L.A. and 

17 back. 

18 So, this time we have number of cases in the Valley, so 

19 we're trying it here in Sacramento and see how that works. And 

20 we have talked about maybe doing Orange County. I think it's 

21 next time instead of downtown Los Angeles. See how that works 

22 out. 

23 If we have a spate of cases that come in from, say, San 

24 Diego, we might consider holding one there, or in Fresno, or 

25 Bakersfield, or wherever it would make the most sense for 

2 6 everybody to get to, and where we can get all our commissioners 

27 and so forth there. 

28 Being such a small group, it's not hard to move us 



around. 

CHAIRMAN LOCKYER: Good thought, to be consumer 
friendly in that manner. 

Senator Ayala. 

SENATOR AYALA: Let me see if I understand how it 
works . 

If I am turned down, or if I'm a business person that 
has liquor on the premises or off premises, and the ABC suspends 
my license, if I'm not happy you come to your board? You're the 
appeal board. 

MR. DAVIDIAN: The appellate level, right. 

SENATOR AYALA: Of what the ABC does. 

MR. DAVIDIAN: Right. 

SENATOR AYALA: And how many of those hearings do you 
have a year? 

MR. DAVIDIAN: Of that particular type. 

We'll have anywhere — I think the lightest meeting 
we've had in the time I've been there, we had around eight or 
ten cases, but we can have as many as eighteen. In fact, we 
could go beyond that. It's whatever the caseload is, we hear. 
It could be twenty, twenty- two. 

We might actually have to go into a second day, 
although that's not happened in the time I've been there, and I 
don't know that last time it was that they had to do that. 

SENATOR AYALA: According to the information we have, 
two-thirds of those appeals come from the Los Angeles regional 
area. 

MR. DAVIDIAN: A great deal. Most of our meetings are 



8 

1 in Los Angeles. 

2 SENATOR AYALA: So you are in that area quite a bit? 

3 MR. DAVIDIAN: Yes. We — two out of three meetings 

4 will be in the Los Angeles metropolitan area or Orange County. 

5 SENATOR AYALA: Thank you, Mr. Chairman. 

6 CHAIRMAN LOCKYER: Senator Lewis. 

7 SENATOR LEWIS: Do you hear appeals from both sides of 

8 the issue, from those who both have licenses rejected, and then 

9 also those that are upset that you granted licenses? 

10 MR. DAVIDIAN: More often than not, our cases are 

11 enforcement matters where somebody has been granted a license 

12 and there's a problem with the license. 

13 Yes, we hear from all sides. 

14 SENATOR LEWIS: In terms of those issues where the 

15 question is one of over concentration of licenses, or perhaps 

16 it's more like a zoning issue, if there's no other complaints 

17 brought forth in terms of the behavior of the licensee, or 

18 anything like that, what's been the kind of overall, if you can 

19 give me like a percentage, track record of what percentage of 

20 the time you end up finding with the licensee as opposed to 

21 those people that are complaining? 

22 MR. DAVIDIAN: I would say more often than not, if 

23 there is actually a reasonable opposition, or protest, more 

24 often than not we'll go with the protest, if there's a 

25 reasonable protest, and if there are multiple protests. 

2 6 Often times, you'll get a protest from somebody, we had 

27 one a couple of months ago, where a fellow didn't want a liquor 

28 store to be selling liquor across from his condominium complex 



because he was afraid that the parking could be a problem if the 
Lotto jackpots got too high, and that people would be stopping 
in the middle of the street and running in. 

Well, it really hadn't happened, but he was concerned 
about that. Yet, everybody else in the condo complex wanted 
this place to have a liquor license. 

So, in that case, where there was one protest — and 
the fellow had moved out, incidentally. He still owned the 
place, was renting it. In that case, we went along and allowed 
the license because everybody else seemed to be pleased with 
it. 

But in a case where there are, you know, several 
protestors, then we will, more often than not, if there's a 
reasonable argument there — church, school, quiet neighborhood, 
already two or three liquor stores in the area, or restaurants, 
or whatever it may be — then we'll go along with that. 

It's a delicate balancing act, because you have 
property right versus, you know, the land owner, and the right 
of commerce, so you don't want to stop that, either, but you 
have to draw a balance. 

SENATOR LEWIS: Would that rule of thumb also apply, 
let's say, to gas stations who want to expand and have like a 
little convenience store. 

MR. DAVIDIAN: A convenience store is a very common 
issue that we have as to whether or not the convenience store on 
the south side of the road should be permitted in that there is 
a convenience store on the north side of the road, just down 
half a block or so, that's already selling beer and wine, for 



10 

1 example. So, those issues do come up. 

2 We go all the way from a beer and wine license at a 

3 convenience store, all the way up to, you know, fine wine; 

4 whether or not you should allow a liquor store that will 
concentrate primarily on very expensive wines in a particular 

6 neighborhood. So, it runs the gamut. 

7 CHAIRMAN LOCKYER: Senator Petris. 

8 SENATOR PETRIS: I didn't understand the impact of the 

9 use of a dancer in a bar. It's a very important social 

10 question. 

11 MR. DAVIDIAN: Would that be with the wrestling or 

12 without? 

13 SENATOR PETRIS: Without. 

14 I got the impression that that immediately drew the 

15 attention of the agency to that, and they took another look at 

16 liquor license, or they upped the standards? I don't 

17 understand. What is the problem? 

18 MR. DAVIDIAN: If there is — if a place is going to 

19 allow nude dancing,- for example, they can't get a liquor 

20 license. There are rules, very specific rules about what parts 

21 of the body can be displayed, and what kind of simulated 

22 dancing, whatever kind of action. It's very specific and rather 

23 explicit rules about how that can be done. 

24 So what you will have is, you'll have somebody that'll 

25 have a place, a nightclub, and they'll allow exotic dancing, 

26 and they have liquor license. But the exotic dancing gets a 

27 little too exotic, and then all of a sudden, certain things are 

28 done, or parts of the body displayed, or conduct on the dance 



11 

floor, or on the stage, rather, that will take them beyond the 
limits of the law. That's when the problem comes in. 

You'll also have the problems in that kind of a 
situation where there is — where employees of the bar are 
actually doing — are soliciting drinks, for example, which is 
illegal. You know, Miss Kitty on Gunsmoke, you can't do that 
anymore. You know, you can't walk up to somebody and say, "Hey, 
why don't you buy me a drink," and then they get a kick-back for 
the drink. That's not permitted. 

So, you'll get that type of conduct, and sometimes 
it'll be the exotic dancer that'll be out soliciting the drinks. 

SENATOR PETRIS: I thought Miss Kitty was the owner. 

MR. DAVIDIAN: Yes, but the owner, but she was also — 
she had lots of people that were helping her out, as it were. 

CHAIRMAN LOCKYER: Senator Ayala. 

SENATOR AYALA: Your commission here determines whether 
an exotic dance gets too exotic? 

CHAIRMAN LOCKYER: How much field work do you do. 

[Laughter. ] 

MR. DAVIDIAN: You know, I rather thought that these 
questions would come up. I brought photographs, Senators. 

[Laughter. ] 

MR. DAVIDIAN: I'll tell you, some of the hearings get 
interesting, and the briefs are, as it is were. 

SENATOR AYALA: Is there a criteria, or is it just in 
the eyes of the beholder that you determine that it's too exotic 
or not? 

MR. DAVIDIAN: No, it's very specific in the law as to 



12 

1 \ what parts of the body can be shown, or what types of conduct is 

2 permitted. It's very specific. 

3 SENATOR AYALA: It's not up to the people who are 

4 listening to it. It's in the law? 

5 MR. DAVIDIAN: Yeah, and I'll tell you, when you read 

6 some of these briefs, they're very specific about what kind of 
conduct is permitted and what isn't permitted. And generally 

8 speaking, the argument is, well, she didn't exactly do it that 

9 way, or he didn't really touch her. You don't want to hear more 

10 about it here in this mixed setting, but it's a very — they can 

11 get very explicit at the time of hearing. 

12 What happens is, the law is very, very specific on what 

13 you can and cannot do in a licensed facility. 

14 SENATOR AYALA: Is the public invited to your hearings? 

15 MR. DAVIDIAN: Yes, we generally ask for a certain age 

16 limit. But anybody can show up for a hearing. 

17 CHAIRMAN LOCKYER: Other questions? 

18 MR. DAVIDIAN: I have some specific places, if you want 

19 a field trip. 

20 CHAIRMAN LOCKYER: Is there anyone present who'd wish 

21 to make any comment? 

22 SENATOR BEVERLY: Move we recommend confirmation. 

23 CHAIRMAN LOCKYER: Well, I just had a couple more 

24 question. Actually, I think they're probably more personal, and 

25 I apologize in advance for getting on that side of things, but I 

26 think it's probably necessary because, certainly, your 

27 education, your professional experiences, your approach and 

28 demeanor with respect to the tasks that we expect to be handled 



13 

by the Control Board are appropriate ones for that work. 

And so, the question I want to ask, really, first is to 
try to understand — I have the convenience of your vita in 
front of me. Some of these dates you may not recall — but five 
years in the mid-' 80s of working in the Wilke firm, et al. 

MR. DAVIDIAN: Yes. 

CHAIRMAN LOCKYER: And then ag. labor for a couple of 
years, and then INS for several years. 

MR. DAVIDIAN: A couple of years. 

CHAIRMAN LOCKYER: Then FPPC for four years. 

MR. DAVIDIAN: Full term. 

CHAIRMAN LOCKYER: When did that end, FPPC? 

MR. DAVIDIAN: A year ago January, so it's been about 
fifteen, sixteen months. 

. CHAIRMAN LOCKYER: January of '95. 

MR. DAVIDIAN: That would have been '95, yes. 

CHAIRMAN LOCKYER: And then, I guess, right away back 
to Wilke. Was there a gap there? 

MR. DAVIDIAN: I went back very shortly after I left. 
I actually wasn't going to do that, but I went back and had a 
visit with them after I had left the state, and it was just kind 
of like going home. It's a good group of people, so I went back 
as of counsel. 

CHAIRMAN LOCKYER: But you did legal work with them, or 
what was your status? 

MR. DAVIDIAN: As of counsel. I was a partner there 
when I left in '87 to go to the Agricultural Labor Relations 
Board, and I came back as of counsel. 



14 

1 CHAIRMAN LOCKYER: What does that mean with respect to 

2 that work? It's not a mystery where I'm probably headed, but 

3 there was some controversy with your legal work, as some form of 

4 member of this firm, some controversy with respect to the legal 

5 work with people who had matters before FPPC, and the 

6 appropriateness of the former chair of that body handling legal 

7 matters before it. 

8 Could you just talk about that? 

9 MR. DAVIDIAN: Sure. Of counsel means I'm not an 

10 equity partner in the firm. That's all it is. There is not 

11 particular rank in the firm, other than as a partner, and 

12 associate. And of counsel is generally a senior lawyer who does 

13 not have an equity interest in the firm. 

14 CHAIRMAN LOCKYER: You've now explained what I am. 

15 That's my status also with my law firm. It's always a big 

16 mystery around here what it means. It means nothing. It means, 

17 "Hi, nice to see you." 

18 MR. DAVIDIAN: There's a very significant meaning to 

19 it. You get paid well, but you don't have to go to the 7:00 

20 a.m. partnership meetings. That's the main thing. 

21 CHAIRMAN LOCKYER: You could get paid? Oh, you're 

22 telling me something else new. 

23 MR. DAVIDIAN: Senator, you need a lawyer. I can help 
2 4 you on this. There are labor laws in this state. 

2 5 CHAIRMAN LOCKYER: But you would handle individual 

26 cases? 

27 MR. DAVIDIAN: Yes, and I have clients. 

28 CHAIRMAN LOCKYER: How many did you have that involved 



15 

the FPPC during that year? 

MR. DAVIDIAN: It's hard to say. 

CHAIRMAN LOCKYER: Actually, I guess it wasn't a year 
because you were appointed to the Appeals Board after several 
months . 

MR. DAVIDIAN: Yes, it was several months later. 

It's really hard to say, but — because I have a very 
broad practice. I also represent — I'm doing a lot of what I 
used to do before I got into government. I represent doctors in 
medical malpractice cases, for example. I do general 
litigation. But I had several cases over there at the FPPC. 

But the important thing is that the revolving door 
provisions apply specifically to — you have a one-year 
revolving door provision as far as lobbying or trying to 
persuade administrative action. And there's a lifetime ban on 
getting involved in any case in which I was involved or there at 
the FPPC when I was Chair of the FPPC. So, those I can't ever 
get involved with. 

CHAIRMAN LOCKYER: If you were involved, you can't 
touch those. 

MR. DAVIDIAN: Can't touch those, no. 

CHAIRMAN LOCKYER: But as a lawyer, there's no 
appearing for a client, there is no one-day ban in the law? 

MR. DAVIDIAN: For enforcement proceedings that were 
not underway at the time. 

If it was being investigated before I left, see, I 
wouldn't necessarily know fit was being investigated, so the 
first thing I do if I have a potential enforcement case is, I 



1 will contact them and say, "Was anyone doing anything on this 

2 while I was still there?" If they were, it goes somewhere else. 

3 I can't touch it. If they weren't, then it's a case that I 

4 could take. 

5 Enforcement cases are specifically exempt. It's the 

6 administrative action cases, matters, that are covered by the 
revolving door. So that — we very carefully avoided getting 

8 involved in anything like that. 

9 CHAIRMAN LOCKYER: So, administrative matters. 

10 MR. DAVIDIAN: Administrative action, I think, is what 

11 it says. 

12 CHAIRMAN LOCKYER: What is that? 

13 MR. DAVIDIAN: You know, it'd be like, it's easier to 

14 say what it isn't than what it is. 

15 In the enforcement case, what I did for the year that I 

16 was under the revolving door, the only types of things I did 

17 were enforcement cases. I never went into the FPPC offices in 

18 that year. I never went to the public hearings, even though I 

19 could have, I never went there. 

20 CHAIRMAN LOCKYER: So, you would show up at the Board. 

21 MR. DAVIDIAN: I wouldn't go to the Board. I stayed 

22 away for a year. 

23 CHAIRMAN LOCKYER: I mean the Commission. 

24 MR. DAVIDIAN: Well, the Commission, yes. 

25 CHAIRMAN LOCKYER: But if you're involved in an 

2 6 enforcement action, don't you have to go to the Commission? 

27 MR. DAVIDIAN: Generally, when — we're at the staff 

28 level before you get up, you know. I would not — I wouldn't go 



17 

into the offices and deal with that. We dealt with it either on 
the telephone. We dealt with it by mail, that type of thing. 

But I did not want to have the appearance of showing 
up there during that one year, and I didn't do it. I stayed 
away. 

CHAIRMAN LOCKYER: What's the difference now? 

MR. DAVIDIAN: I'm sorry. 

CHAIRMAN LOCKYER: Between enforcement and — 
enforcement you could do. 

MR. DAVIDIAN: Right. 

CHAIRMAN LOCKYER: Administrative action you couldn't? 

MR. DAVIDIAN: You know type of thing. I would not go 
in to try to establish a new — how would I put this — if 
somebody came to me and said, "I'm a Legislator. Can I do X, Y 
or Z?" I wouldn't go in and try to get a formal advice letter, 
or something like that, and try to persuade them this is how you 
should approach this. I stay away from that type of thing. 

Enforcement cases are a different ball game because you 
actually have a hearing on the matter before an administrative 
law judge, and so on, if it goes that far. Otherwise, you might 
settle it at some point in time. 

I'm trying to remember now, I don't know if in that one 
year we had — I imagine we probably settled some things, but 
anything that was settled would have to come before the 
Commission itself for a full vote, and it would be a public 
vote. 

You can't settle anything with the FPPC in private, 
other than in a civil action, in which case it has to be made 



18 

1 public immediately thereafter. 

2 CHAIRMAN LOCKYER: Was there any dispute about this 

3 distinction between administrative and enforcement? 

4 MR. DAVIDIAN: No one's — no one has indicated that to 

5 me . 

6 I know there was a flurry of activity when I 
represented a former member/ at the time, a member of the 

8 administration where, they said, "You can't do that." And I 

9 said, "Why not?" And they looked, and then, "You're right. You 

10 can do that." 

11 Then there was an effort at that time to explore 

12 changing the law to say you couldn't do that, but that fell 

13 apart because it would extend — well, it would almost have to 

14 extend to everybody, even staff in the Legislature. It became 

15 an untenable — from what I'm told. I wasn't part of that — 

16 but it became an almost untenable change in the law. 

17 So, the thing that I was careful to do was to make sure 

18 that whatever it was that I undertook was not going on when I 

19 was Chair of the FPPC. If it started afterwards, and the law 

20 was clear that it not a problem, I would become engaged, but 

21 only after going through that type of analysis. 

22 CHAIRMAN LOCKYER: Now, you continue to be of counsel 

23 at Wilke. 

24 MR. DAVIDIAN: Yes. 

25 CHAIRMAN LOCKYER: Because the ABC Appeals Board is not 

26 deemed full-time employment? 

27 MR. DAVIDIAN: Right, that's correct. 

2 8 CHAIRMAN LOCKYER: So, you're able to do both. 



19 

MR. DAVIDIAN: That's right. 

CHAIRMAN LOCKYER: Are there any rules with respect to 
clients your law firm is allowed to handle that might have an 
ABC issue? 

MR. DAVIDIAN: We would never take an ABC issue at the 
firm. I have told the firm, even if the firm could, because I'm 
not an equity partner, I have informed the firm that as long as 
I'm at the ABC, I do not want an ABC matter there. 

As far as I know, no one's tried to hire us for that. 
We've never had anything like that. I've never had to recuse 
myself from anything. I expect as long as I'm at ABC, that's 
the way it's going to continue. 

CHAIRMAN LOCKYER: Additional questions, anyone. 

I think I heard a motion. 

SENATOR BEVERLY: Move we recommend confirmation. 

CHAIRMAN LOCKYER: We have recommended confirmation. 
Call the roll, please. 

SECRETARY WEBB: Senator Ayala. 

SENATOR AYALA: Aye. 

SECRETARY WEBB: Ayala Aye. Senator Lewis. 

SENATOR LEWIS: Aye. 

SECRETARY WEBB: Lewis Aye. Senator Petris. 

SENATOR PETRIS: Aye. 
. SECRETARY WEBB: Petris Aye. Senator Beverly. 

SENATOR BEVERLY: Aye. 

SECRETARY WEBB: Beverly Aye. Senator Lockyer. 

CHAIRMAN LOCKYER: Aye. 

SECRETARY WEBB: Lockyer Aye. Five to zero. 



20 

1 CHAIRMAN LOCKYER: Good luck. 

2 MR. DAVIDIAN: Thank you, Senators. I'll tell you 

3 about those places a little later on. 

4 [Laughter.] 

5 CHAIRMAN LOCKYER: Mr. Dyer, if you'll come up. Howdy. 

6 MR. DYER: Howdy. How are you. Senator? 

7 MR. CHAIRMAN: Welcome back. 

8 Do you want to sort of start with any explanation of 

9 why you like this job, or do you want us to turn you down and 

10 free you from this burden, or what you think here? 

11 MR. DYER: I'm reluctant to try to make the Public 

12 Employment Relations Board sound as if it's as stimulating an 

13 assignment as the Alcoholic Beverage Control Commission may be. 

14 I love the job. It's about resolving very, very 

15 difficult issues involving the rights and responsibilities of 

16 public employees, public employers, and it's about our 

17 responsibility to try to make the system of labor negotiations 

18 work for the people of California. 

19 I have had an opportunity to visit with key staffers 

20 and individual Members of this committee. I would prefer to 

21 proceed by answering any questions you may have. 

22 CHAIRMAN LOCKYER: Let me start by just focusing in for 

23 a minute on charter schools. 

24 Since the law allows for a charter school to exempt 

25 themselves from collective bargaining laws, I don't know if they 
2 6 have to notify anybody when they do that? Would you know how 

27 many have done that? 

2 8 MR. DYER: I do not, Senator, know how many have done 



21 

that. I do know that the statutes provide for charter schools 
to operate outside of the Educational Employment Relations Act. 

No charter school case has come before PERB, although 
the court system has historically asked PERB to first determine 
whether or not PERB has jurisdiction over any issue, because it 
might spill over into another area, and the courts have asked 
PERB to do that because the courts have not chosen to develop 
the expertise in labor law that PERB is asked to develop. 

I would emphasize that we have not yet seen any charter 
school case. The formation of a charter school involves the 
teachers, the community, the parents, the school board, and it 
should be in that process, as I understand it, that labor 
relations and relationships between the district and the 
teachers and the classified employees would be spelled out. 

Does that respond to your question? 

CHAIRMAN LOCKYER: Partly. It hasn't come before you 
so far. 

MR. DYER: That is correct. 

CHAIRMAN LOCKYER: I guess it would only come up if 
there were a dispute, maybe, the claim of an unfair practice, or 
something that would be germane to your duties. 

What would make it come before you if they did exempt 
themselves? 

MR. DYER: I would say it's like playing with fire, 
speculating about hypotheticals. 

Someone could bring a case to us involving — well, I 
don't think we'd — actually, our board agent would turn the 
case down, and then there could be an appeal to PERB, saying 



22 

1 that this teacher at this charter school is somehow involved, or 

2 this district at a charter school is somehow involved in issues 

3 which PERB has a right to decide and an obligation to decide. 

4 Then, we would either look at the facts of that individual case, 

5 and look at the Education Code and the charter school statute 

6 and see if, for any reason, the Education Code is not clear. 

7 If we were to make a decision that was not — any 

8 decision from PERB is appealable to an appellate court. 

9 Normally on a jurisdictional issue, four or five times a year, 

10 someone will appeal a PERB case to the appellate court system. 

11 Less than once a year the appellate court will take the case and 

12 make some contrary decision. 

13 We're dealing with hypotheticals here, at least from my 

14 point of view, in that no charter school issue has come to us. 

15 We recognize the fact that charter schools are meant to be 

16 community schools and independent. 

17 I say "we", I do. 

18 CHAIRMAN LOCKYER: It may be interesting to note that 

19 something like 20 percent of all the charter schools are home 

20 instruction. I don't know that people have thought about that 

21 when we created the charter school mechanism, and especially if 

22 the Governor wants to give every school $50,000, this may 

23 present an interesting problem with the home instruction 

24 so-called schools that have no educational quality or competence 

25 requirements, or testing requirements, or anything. They just 
2 6 opt out. 

27 SENATOR PETRIS: Not even an enrollment number? 

28 CHAIRMAN LOCKYER: No, home instruction. 



23 

So, no unfairs or experience with that. 

Do you have any sense of whether the law needs work 
that you are engaged in working with? Are there problems that 
you wish we'd re-examine the basic codes governing your 
activities? 

MR. DYER: I've been at the Board for six months, and I 
do not at this point — have not felt that it was my 
responsibility to change the law. 

I've got 29 years in Sacramento trying to interpret and 
implement the will of the Legislature. I don't think I was, 
again, asked to try to change the law. 

I do not have any sense that the law needs to be 
changed right now. 

Our workload is heavy, and I think appropriate. We 
have cut our staff and our budget by more than 50 percent in the 
last five years. We have no significant backlog. We finished 
last fiscal year with 15 cases on the docket. I think we will 
finish this year with less than 15 cases on the docket. 

I'm not prepared at this point, and I don't know that I 
will be prepared, to recommend any changes in the law. 

CHAIRMAN LOCKYER: If they're not obvious to you, I 
think it's always fair for us to learn from actual experience, 
whether there seems to be glitches or inefficiencies. So, any 
time you think you see something, you can always feel invited to 
let us know. 

MR. DYER: I'm sure there will be something that could 
be better. 

CHAIRMAN LOCKYER: Are there other questions from 



24 

1 Members? 

2 Senator Ayala. 

3 SENATOR AYALA: I'd just like to ask, what are the most 

4 pressing issues you have before the Board at this time? 

5 MR. DYER: Probably the most news worthy issue, one 

6 which will become news worthy, is a case involving teaching 
assistants and research assistants at the University of 

8 California. It's come to the Board on appeal. 

9 The issue is whether or not the teaching assistants and 

10 research assistants are students and are thus not involved — 

11 need not be involved in collective bargaining, or are they 

12 employees of the University, and do they thus have collective 

13 bargaining rights. 

14 SENATOR AYALA: Do you have a backlog at all in cases? 

15 MR. DYER: No, we do not, Senator. We have a goal for 

16 turning around each case in 90 days, and we are satisfying that 

17 time schedule right now. Thank you. 

18 CHAIRMAN LOCKYER: This may be an old number. I note 

19 in our materials that several years ago, the observation was 

20 made that it took almost five times 'as long in California as in 

21 New York to issue a decision. 

22 They can't be doing it in 15 days, I guess, so that 

23 must be an old comment. 

24 MR. DYER: It's not a comment I've heard before, 

2 5 Senator. I'd be happy to get an answer to the question for you. 

2 6 I frankly don't have a clue. 

27 CHAIRMAN LOCKYER: Actually, 18 days would be 

28 one-fifth. 



25 

MR. DYER: Our decisions at the Board level involve at 
least three members of the Board on each decision. We first 
issue a proposed decision memo, summarizing the case to each of 
the other Board members. And each member is given an 
opportunity to respond to that. 

We issue an initial draft. There may be a dissent. It 
is a time consuming process, but one where every member is there 
everyday. It moves right along. It's a judicious process that 
is frankly completed within reasonable timeframes. 

CHAIRMAN LOCKYER: Is there any personal philosophy 
that you may have regarding the appropriateness of binding 
arbitration, or a public employee's right to strike? Are either 
of those matters relevant in what you do as a member of the 
Board? 

Do I need to ask you how you feel about those kinds of 
matters? 

MR. DYER: I'm happy to answer your question. You 
don't need to. I am comfortable with my understanding of the 
law at this point, which says that there are situations, there 
can be situations in which public employee strikes can be legal. 
There are also situations in which the courts may find, and PERB 
may find that it's inappropriate or illegal to strike. 

Certainly, public employee organizations and public 
employers are entitled to enter into agreements calling for 
binding arbitration. 

I say "certainly". That's a philosophical statement. 
My legal advisor's in the audience. 

CHAIRMAN LOCKYER: Is there anyone present that wishes 



1 to comment for or oppose the nomination. 

2 What's the pleasure of the Committee? Senator Petris. 

3 SENATOR PETRIS: Move. 

4 CHAIRMAN LOCKYER: Move confirmation, recommending 

5 confirmation. Call the roll. 

6 SECRETARY WEBB: Senator Ayala. 

7 SENATOR AYALA: Aye. 

8 SECRETARY WEBB: Ayala Aye. Senator Lewis. 

9 SENATOR LEWIS: Aye. 

10 SECRETARY WEBB: Lewis Aye. Senator Petris. 

11 SENATOR PETRIS: Aye. 

12 SECRETARY WEBB: Petris Aye. Senator Beverly. 

13 SENATOR BEVERLY: Aye. 

14 SECRETARY WEBB: Beverly Aye. Senator Lockyer. 

15 CHAIRMAN LOCKYER: Aye. 

16 SECRETARY WEBB: Lockyer Aye. Five to zero. 

17 MR. DYER: Thank you. 

18 CHAIRMAN LOCKYER: Mr. Moore, Energy Resources 

19 Conservation and Development Commission. Good afternoon. 

20 MR. MOORE: Good afternoon, sir. 

21 CHAIRMAN LOCKYER: Did you want to start with my 

22 opening comments? We always welcome it, if you care to. 

23 MR. MOORE: Mr. Chairman, I have some very brief 

24 opening remarks I'd like to make. 

25 First of all, I'd like to say that I'm honored to be 

26 here in front of you and to be undergoing this process. 

27 I'm Michel Moore, and I was appointed by Governor 

28 Wilson on October 1, 1995, to fill the unexpired term of Richard 



27 

Bilas, who returned to the academic community to resume 
teaching. 

The Warren-Alquist Act requires Commissioners to hold 
specific skills and background qualifications for nomination to 
their seats, and I occupy the seat designated for an economist. 
As an economist, my background reflects a mix of academic/ 
private, and public sector work. I obtained an undergraduate 
degree from Humboldt State University, a Master's Degree in land 
economics from U.C. at Davis, and I'm currently a Ph.D. 
candidate in economics from the University of Cambridge in the 
United Kingdom. 

I've taught courses in economics at the Monterey 
Institute of International Study, U.C. at Davis, and at 
Cambridge. 

I was previously elected to two terms as a County 
Supervisor in Monterey County, served as a Deputy Director for 
Local Government in the Deukmejian administration, and as 
principal economist for Landmark Land Company prior to returning 
to Cambridge for my Ph.D. research. 

My previous principal research areas include local 
government, fiscal impacts, and the long-term costs implied by 
conversion of agricultural lands adjacent to or near urban 
areas. 

Since joining the Energy Commission six months ago, my 
primary responsibilities have included being presiding member of 
the Energy Efficiency Standards Committee, and second member on 
the Fuels Committee, and second member on the Biennial Report. 

I'd be happy to answer whatever questions I can for 



28 

1 you, sir. 

2 CHAIRMAN LOCKYER: Thank you. 

3 I guess, perhaps, a place to begin that might be mostly 

4 academic, but I'm not sure, and that's the whole current 

5 discussion of electrical restructuring. I guess the Commission 

6 has a role in at least general research and planning for energy 

7 needs. 

8 Do you see that role being impacted in any way by the 

9 current discussion and orders from the PUC? 

10 MR. MOORE: Yes, sir, I do. I think that the 

11 Commission -- if you'll permit me just a bit of history. I'm 

12 going back into the mid- '70s — defined its role as the siting 

13 of new energy projects, the arbitor of what was seen, at least 

14 at that time, as a burgeoning demand for, and construction 

15 demand for nuclear projects. It basically defined their front 

16 end role, and they've evolved from there, especially in terms of 

17 the forecasting activities, and the research and development 

18 activities that we pursue. 

19 I think that in terms of the CPUC and their 

20 restructuring decision, that our role has been less than clear. 

21 I'm not convinced at this point that we have effectively defined 

22 it, but we're trying to. And I think that there are certain 

23 areas where we bring very specific expertise to that party, 

24 specifically in the area of market power, defining what market 

25 power is going to be. And I think of interest to everyone of us 

26 who are your constituents and my constituents living in the 

27 state, the question of a proper needs assessment in a 

28 deregulated market. 



29 

We bring some intellectual horsepower to that argument/ 
and I hope that as the PUC restructuring decision goes along, 
and with their eventual filing to the Federal Energy Regulatory 
Commission next year — late this year and into next year — 
that we'll continue to have a role. 

But I have to say that the way the law is structured 
today, and the way the decision came down from my colleagues at 
the PUC, it's not clear, certainly not clear on the surface, 
what role that we could play in support of that. And so, we're 
in the business of trying to define it, literally, even as we 
speak. 

CHAIRMAN LOCKYER: What would be the options? 

MR. MOORE: Well, the options, it seems to me, range 
all the way from, we simply step aside and say, whatever the PUC 
is going to do is just fine. 

And the second option, it seems to me, or the second 
end of the range, is that we get into the argument, which we are 
doing through what are known as the working groups — and I'm 
sure that Mr. Neeper will probably find time to refer to that to 
try again this afternoon — in terms of the working groups to 
try and influence the flow of information that the PUC will see 
before they make their final filing. 

I think in that end of the spectrum, we have the 
opportunity to at least change some of the ideas, and I'll refer 
back to this issue of market power. We think it's critical for 
the consumer and should be tread on very, very carefully, and we 
think that some of the arguments that we bring to that are 
pertinent today. 



30 

1 Whether or not they'll prevail, because again, the PUC 

2 will have the jurisdiction for the filing, I can't tell you, but 

3 I hope that through active and intelligent participation through 

4 the papers that we write and the presentations that we make, we 

5 will, in fact, influence that. 

6 CHAIRMAN LOCKYER: Are there questions from other 

7 Members at all? Senator Ayala. 

8 SENATOR AYALA: I'd like to inquire, the relationship 

9 between the Energy Resources Commission and the PUC, is it 

10 duplication of responsibilities here? If so, is there a move 

11 afoot to make sure that doesn't occur? 

12 MR. MOORE: I know that in some quarters, there's a 

13 perceived duplication. I think that the roles, at least as they 

14 are currently laid out, with the PUC in a rate, regulatory role, 

15 and the California Energy Commission in a policy role for 

16 energy, long-term energy policy, and in the siting role where we 

17 site — have siting control over new plants, that that 

18 distinction is pretty clear today. 

19 I think that in the future, as the restructuring 

20 process takes hold, the role of the CUC [sic] starts to get a 

21 little clouded, and that we have to redefine a bit more of what 

22 we're able to provide to the electricity and, ultimately, to the 

23 energy industry at large. 

24 The PUC role is likely to shrink somewhat, given that 

25 the monopolistic entities, the investor-owned utilities, are 

2 6 going to shrink up their holdings. So, I think that right now, 

27 the line is relatively clear, at least as far as the law goes, 

28 but it is going to need to be cleared up, certainly, over the 



31 

course of this next year in order to provide good guidance for a 
competitive industry. 

The Little Hoover Commission is due to publish their 
remarks, I believe, in late summer is the last date that I 
heard. I think that what comes out of that is likely to be 
sharpening of those lines, and give all of us a little more 
guidance as to where we'll probably end up participating. 

SENATOR AYALA: In terms of the power plants, the PUC 
is in charge of licensing the power plant, and you're involved 
with the transmission lines. There's a little competition 
involved there? 

MR. MOORE: No, in the case of licensing the power 
plants for thermal power plants over 50 megawatts, we are in 
charge of that siting. 

We also, in the ends, are in charge of the compliance 
with the regulations post the establishment of the plant. 

The rate structures and the transmission facilities 
fall under the jurisdiction of the Public Utilities Commission. 

SENATOR AYALA: The Chairman of the Commission is now 
in the Far East, trying to develop some kind of relationship 
between those countries and California in terms of energy, 
selling energy, or whatever it is that he's going to do with 
them? 

MR. MOORE: Yes, Senator. 

One of our responsibilities under the Warren-Alquist 
Act is to foster international cooperation and development of 
energy resources. And our Chairman has been part of a trade 
mission to go and expand those horizons, if you will, to try and 



32 

1 make sure that some of the opportunities that are opening up for 

2 California firms stay open, and that some of the technology 

3 transfer that could come here is, in fact, directed to 

4 California, at least as far as efficiency goes. 

5 SENATOR AYALA: Mostly technology more than anything 

6 else. 

MR. MOORE: Yes, sir. In fact, if you look out at the 

8 California economy, one of the things that we sell best is 

9 intellectual capital and technology transfer. 

10 SENATOR AYALA: Thank you. 

11 MR. MOORE: Yes, sir. Thank you. 

12 CHAIRMAN LOCKYER: Senator Lewis. 

13 SENATOR LEWIS: How many power plants were sited in the 

14 last 12 months or last calendar year? 

15 MR. MOORE: To the best of my knowledge, Senator, we 

16 have only participated in one siting case during that period, 

17 and that was for the Hunter's Point power plant in San 

18 Francisco. 

19 SENATOR LEWIS: How about the last five years? 

2 MR. MOORE: I don't have that number, Senator, but I 

21 can provide it. It has not been a very large number. 

22 SENATOR LEWIS: Isn't that the principal responsibility 

23 of the Energy Commission? 

24 MR. MOORE: That has been — as a matter of fact, in 

25 looking at the law, that's the interpretation that I would give, 

26 is that's a keystone are why we would have an Energy Commission, 

27 is to act as the principal siting authority, yes, sir. 

28 SENATOR LEWIS: In terms of the last, did you say 



33 

Hunter's Point? 

MR. MOORE: Yes, sir, in San Francisco. 

SENATOR LEWIS: What was the principal consideration? 
What is your principal responsibility? Are they safety factors, 
or are they market conditions? 

MR. MOORE: In the case of the Hunter's Point plant, it 
was a fairly complicated issue flowing out of what was known as 
the Biennial Resources Review Process, which set up a goal of 
trying to reach a certain number of megawatts of new energy. It 
was a process that was later abandoned, but the plant that came 
through the process, and still came through to have siting 
control for us, was the Hunter's Point project. 

It would basically repower or replace two existing 
plants in San Francisco in the Hunter's Point area. 

CHAIRMAN LOCKYER: Senator Petris. 

SENATOR PETRIS: You've done a lot of research in a lot 
of areas, according to the poop sheet we have here. 

MR. MOORE: Yes, sir. 

SENATOR PETRIS: I think it's very impressive. 

I was interested in a couple areas. I've been active 
over the years in preserving as much open space as we can, 
green, so forth. I see you have a couple of papers here on golf 
course performance and land development models. One in Rocklin 
and the other one down south. 

MR. MOORE: Yes, sir. 

SENATOR PETRIS: Would you comment on that? What did 
you find in making this study? 

MR. MOORE: Yes, sir. 



34 

1 SENATOR PETRIS: Was there a model golf course. 

2 The reason I ask the question is, when I was more 

3 active in this area, our attention was called to the notion that 

4 we might want encourage and support more and more golf courses, 

5 because they carved out a concern amount of open space, of which 

6 the benefit went beyond just persons who played golf. 

7 I wondered what approach was approach was taken in 

8 this? 

9 MR. MOORE: Yes, sir. 

10 The models that you're referring to were technical 

11 models designed for the bank that I worked for, in this case the 

12 holding company for Landmark Land Company, where I tried to 

13 analyze whether or not they could go in and build a golf course 

14 and sustain it, given membership fees and the premiums that 

15 would attach to the golf course from the houses that they built 

16 next to it. 

17 The answer basically was, without very, very high 

18 premiums, and without very, very expensive houses, the golf 

19 course wouldn't sustain itself. 

20 The second part of your question, though, is perhaps 

21 more interesting than the models themselves, which were really 

22 designed to go on to a financier and say, "We can make this 

23 work." 

24 In my old district in Monterey, where I represented 

25 Pebble Beach and Carmel Valley, we have, as most of you know, a 

26 great number of golf courses. In fact, they're one of the 

27 cornerstones of the local economy: Come to Monterey, and you'll 

28 have access to the best golf courses in the world. 



35 

SENATOR PETRIS: They come from as far as away as Japan 
to play there; don't they? 

MR. MOORE: Well, all the way from Japan to buy the 
golf course at least twice that I know of, and the company. 

And it presents a dilemma for me as a former elected 
official, and that is, in the preservation of open space, do you 
allow a private enterprise to come in and literally develop 
something which has exclusive rights to use, but basically 
doesn't allow the public to do anything except view it, the 
general public. 

And as consequence, if one of the things that you're 
trying is to do is protect a vista that you view through, a golf 
course may be the appropriate way to do that. But there may be 
better open space tools around than turning over development to 
private golf course developers. 

And I just say that from my experience in Monterey. 
I'm not sure we got the best of all worlds by doing it that way. 

SENATOR PETRIS: Well, wouldn't the pressure increase 
if you didn't put in a golf course for a lot of housing, for 
example? Isn't that part of the problem? 

MR. MOORE: Well, a golf course can act as a buffer 
zone, although, as I indicated very briefly before, one of the 
reasons that golf courses become viable financial instruments is 
because of the premium attached to the houses built around 
them. So, by definition, they tend to encourage housing 
development around them. 

SENATOR PETRIS: We've all seen those ads: Buy this 
house; it's on the ninth hole. 



36 

1 MR. MOORE: Yes, sir. 

2 SENATOR PETRIS: You don't have any recommendations to 

3 make to us who are interested in open space resulting from those 

4 studies? 

MR. MOORE: Senator, I'll tell you, I would be very 

6 happy to sit down with you and discuss some of the modeling that 
we've done for preserving open space, how to do it, and some of 

8 the newer recommendations as far as easements and agricultural 

9 use patterns. Absolutely, at your convenience. 

10 And yes, I do have some recommendations to make. 

11 SENATOR PETRIS: In your term on the board at the 

12 county level, did you encounter the Williamson Act, and get 

13 impacted by that in your county? 

14 MR. MOORE: I absolutely did, sir.. 

15 SENATOR PETRIS: Has it been a plus or not? 

16 MR. MOORE: In Monterey County, I would say that it has 

17 been a limited positive effect, in the sense that we had more 

18 people enroll in the Williamson Act who were farther away from 

19 development pressure than closer, and as a consequence, it 

20 didn't have the intended effect of diminishing pressure to 

21 convert at the urban limit line. So, the economics basically 

22 worked against us. 

23 What we were trying to preserve, we needed another tool 

24 to do it. I'm not sure that Williamson was the right tool to do 

25 it. 

26 SENATOR PETRIS: Are you still looking for a tool? 

27 MR. MOORE: I think I might have found a tool in some 

28 of the newer agricultural easements that can be used. I think 



37 

ultimately/ if adopted, they'll be more successful. 

SENATOR PETRIS: How does an agricultural easement 
work? 

MR. MOORE: Agricultural easement would work by 
dedicating off a certain zone, a buffer zone, out from its 
development potential in return for long-term agricultural 
protection to the land owner to keep land in fee. 

SENATOR PETRIS: That's similar to Williamson; isn't 
it? 

MR. MOORE: Except that the Williamson Act is a rolling 
dedication, rededication for ten years, and in the case of the 
easements, they're permanent. 

SENATOR PETRIS: Thank you. 

MR. MOORE: You're welcome, sir. 

CHAIRMAN LOCKYER: Other questions. 

Maybe you might just briefly mention how much emphasis 
or significance potential work in renewable energy sources, or 
energy efficiencies might be in the time you've spent as a 
member of the Commission. Are they matters that come before 
you? 

MR. MOORE: Yes, Senator. 

The question of renewables obviously plays a big part 
in the past Commission policies, and I think that as the CTC, 
the charge for electricity gets debated in the next year, I 
think that renewables will rise to the front of the debate 
again, and we'll be bringing forward some of the research that 
we've got in terms of how they should best be presented and best 
be renewed. 



38 

1 I'd prefer to call the question of renewables a 

2 question of preserving options. Right now, we're in the 

3 business of promoting certain renewable energy sources that I'm 

4 not, at least personally, convinced ought to be there, but we 
ought to consider them for their option value, where we don't 

6 want to lose that because we know that some of the even 

prodigious supplies of natural gas will one day run out, and we 

8 want to make sure that we've got the basis for an alternative 

9 there. 

10 And I think that we'll be holding hearings on those 

11 this next year, and hopefully be using some of the arguments in 

12 that to advance the direction and the basis of the CTC. 

13 With regard to deficiency standards, I Chair the 

14 Efficiency Committee at the Commission, and I'll tell you that 

15 we are going to go back, and we're going to reopen the building 

16 standards question this next year, and look the every single one 

17 of our regulations to make sure not just that it's on the books 

18 and that it gets a certain credit for electricity or energy 

19 reductions or efficiency, but that it's enforceable. 

20 As a product of county government, I'm painfully aware 

21 of the constraints on budgets at the local government level, and 

22 their ability to actually implement what we hand down to them. 

23 So, we're going do to be examining that very, very 

24 closely this next year. 

25 SENATOR PETRIS: I see you've done a lot of surveys on 

26 open space and willingness to pay. 

27 MR. MOORE: Yes, sir. 

28 SENATOR PETRIS: What is the willingness to pay part? 



39 

Is that the private persons who want to take land out of use, 
enlarge the open space area? 

Who has to be willing here? 

MR. MOORE: Senator, when we use the term, willingness 
to pay, economists are referring to how much a person would be 
willing to give up in a charge of some sort or other to preserve 
either an open space vista, farm land, or to acquire some new 
pool, or a park, or something like that. 

What we'll do is use public opinion surveys to test the 
sensitivity of people to various charges, a charge like 
preserving a mountain top that we tried to do down in Riverside 
County. We tested people's public response to an annual charge 
of $25 per person, $30 per person, to find out how much they'd 
be willing to give up, either in a tax or an assessment of some 
sort, to be able to preserve an existing open space entity. 

Using the range of sensitivity, we then came back and 
said, "Okay, now given the likely public support for this, 
here's the kind of bonds issue that you could pass to acquire 
this; or here's the kind of annual charge you could impose and 
still survive the ballot box if you want to acquire this asset." 
And that's the basis of willingness to pay. 

SENATOR PETRIS: Seems to me that's very helpful to the 
local people who are looking in that direction. 

MR. MOORE: When it's done well, it's a great guide, 
and a good indicator and a prod for local government to do the 
right thing, if you will. 

SENATOR PETRIS: Thank you. 

MR. MOORE: Yes, sir. 



40 

CHAIRMAN LOCKYER: Senator Ayala. 

SENATOR AYALA: On the same point/ Mr. Chairman. 

You were involved in the County of San Bernardino in 
1990 with this willingness to pay survey. 

MR. MOORE: Yes, sir. 

SENATOR AYALA: Did that include the 15,000 acres in 
the Chino Valley preserve, agricultural preserve? Is that where 
you did your study? 

MR. MOORE: We did, sir, and what we were trying to 
find out was, what was the value of preserving that to the 
public. 

I'll tell you just as an aside, one of the surprises 
that came out of that, we thought people would want to preserve 
open space because it gave benefits to their property value, or 
because they liked to look at it. 

In fact, one of the reasons that the public down there 
said they wanted open space was that it was an antidote to 
growth, that it was an antidote to what they felt was pressure 
on their daily lives. And at that time, when we did that 
survey, that was a total surprise. That was novel news. It's 
not so novel now. 

SENATOR AYALA: Since then, Lefco has divided the 
preserve into three cities: Chino, Chino Hills, and Ontario. 
They're going to develop it. They're already in the process of 
doing away with the preserve. 

MR. MOORE: I was unaware of that. I'm sorry to hear 
that, Senator. 

SENATOR AYALA: Thank you. 



41 

CHAIRMAN LOCKYER: Is there anyone present that wishes 
to comment? 

All right, I'll entertain whatever motion — 

SENATOR BEVERLY: Move we recommend confirmation. 

CHAIRMAN LOCKYER: All right, Senator Beverly moves 
confirmation. Call the roll. 

SECRETARY WEBB: Senator Ayala. 

SENATOR AYALA: Aye. 

SECRETARY WEBB: Ayala Aye. Senator Lewis. 

SENATOR LEWIS: Aye. 

SECRETARY WEBB: Lewis Aye. Senator Petris. 

SENATOR PETRIS: Aye. 

SECRETARY WEBB: Petris Aye. Senator Beverly. 

SENATOR BEVERLY: Aye. 
. SECRETARY WEBB: Beverly Aye. Senator Lockyer. 

CHAIRMAN LOCKYER: Aye. 

SECRETARY WEBB: Lockyer Aye. Five to zero. 

MR. MOORE: Thank you, sir. 

CHAIRMAN LOCKYER: Good luck to you. 

Mr. Neeper is next. 

SENATOR BEVERLY: Senator Peace, are you here to 
introduce the witness? 

SENATOR PEACE: Yes, I am, Senator. 

SENATOR BEVERLY: Proceed. 

SENATOR PEACE: Mr. Chairman and Members, I appreciate 
the opportunity to just make some brief comments on behalf of 
Commissioner Neeper by way of introduction. 

Since you all have available to you more information, I 



42 

think, any of us probably would ever want to know, including his 
mother, with respect to his professional affiliations and past 
historical accomplishments, let me tell you why I personally 
believe, as chairman of the policy committee who has the 
principal interaction with the Public Utilities Commission, why 
it's important that the Senate act in an expeditious manner to 
confirm Mr. Neeper's nomination. 

It has more to do with the historical evolution of the 
person that is before us in terms of the background and history 
of working a variety of different circumstances, both public and 
private, and where that happens to bring him in juxtaposition to 
the Commission and the fellow Commissioners that happen to be 
there. 

Mr. Neeper and I may or may not agree on a variety of 
issues that will come before us in the next few months and, 
presumably, years that are going to be before the Commission, 
some of which are particularly acute today and hot topics, so to 
speak, many of which are the subject of legislation currently 
moving through this body. And while I wouldn't want to comment, 
to be honest with you, one way or the other in terms of our 
likelihood of agreeing on those issues, I suspect we're going to 
have some substantial disagreements. 

But what I believe that Mr. Neeper will bring to this 
Commission is an understanding of and historical involvement in 
the kind of efforts that are necessary to make complex changes 
work. To be very candid, my interaction with the Commission 
over the past few months has left me with an impression of just 
the opposite, a circumstance in terms of a culture inside that 



43 

Commission at a staff level, and sometimes at other levels, that 
seem to have a difficulty digesting and understanding how to get 
through very complex issues, with many parties on many different 
sides, and many competing economic interests, and how to do it 
in a manner in which you can have a work product that is likely 
to be sustainable and supportable by a variety of different 
groups of people, so that you're, in the end of the process, 
while you may have agreed to something, and all exercised a vote 
to it, you merely see parties back in the courtroom and seeking 
other venues of appeal. 

On the Public Utilities Commission in particular, in 
general and throughout time, but in particular right now, where 
there is very serious debate associated with the deregulation of 
all of the various kinds of areas that are the subject matter 
and purview of the Commission, that is particularly important 
because the parties before the Commission have venues other than 
the Commission itself to take their case, including this 
Legislature and including the courts. And in the case of 
electric utilities, the FERC, the federal regulatory body, and 
in the case of the telecommunication companies, the regulatory 
body, the FCC, that deals with their area. 

As a result, any work product, if it's going to have 
any kind of sustainability and, in return, potential beneficial 
consequence to the state's economy, has to be a work product to 
which there is some level of consensus. Otherwise, one or more 
of the many very well-heeled and economically interested parties 
are simply going to go to other venues. And we're seeing some 
of that exercised in a variety of areas occur here. 



44 

I believe what Mr. Neeper brings to the Commission is a 
background in getting otherwise antagonistic parties to come to 
agreement. The understanding that part of the process in the 
work that we do, whether it be on commissions and bodies such as 
this or in or Legislatures such as this, is to get people of 
disparate views to begin to see the world from the other side's 
viewpoint, enough so that they can agree to agree, and then 
ultimately, be willing to accept work products that often aren't 
exactly what they thought they were originally coming to the 
table to seek. 

The issues before the Commission are extraordinarily 
complex. They're very difficult. I don't think any of us have 
the answers to all of the various things that are before them, 
and it will require, in my view, people of extraordinary 
background and patience, and an understanding fundamentally that 
our role as policy makers sometimes goes substantially beyond 
trying to think of the world's greatest mouse trap in the 
context of how to solve problems, and sometimes involves 
mediating and bringing parties together, and tapping into the 
knowledge and the background that is always buried inside of the 
interests that are being representing in the often, sometimes 
even vitriolic impassioned pleas made by the various parties. 

Mr. Neeper 's background as an attorney and dealing with 
labor issues has him well-qualified to perform that role as a 
mediator and as a facilitator for those kinds of discussions, 
and his involvement in San Diego over the years in politically 
relatively high profile issues, in which he himself may not have 
taken a well-publicized, but a high profile role, nevertheless 



45 

was a very important and significant figure behind the scenes in 
helping people to act more as glue makers, rather than as 
polarizing forces. 

He's been effective in that in the past, and I think he 
can play not just an important role, but perhaps the most 
important role in potentially turning around the reputation, to 
be perfectly frank with you, of this Commission, which is one of 
being — having a predisposition to vacillate, a difficult time 
getting factious parties to agree and come to agreement on 
things that will stick. 

So, that would be my hope. To be honest, it also puts 
a great deal of pressure on him, which he has a history of 
responding to as well. 

I consider his appointment to be an extraordinary one, 
and to be perfectly frank, the key appointment that the Governor 
has made to the Commission, and a very, very important one for 
us to confirm, and I would hope, confirm in a very expeditious 
manner. 

With that, I'll leave him to you. 

SENATOR BEVERLY: Thank' you, Senator. 

Any questions of Senator Peace? 

SENATOR AYALA: Mr. Chairman, with that introduction, I 
move the confirmation. 

[Laughter. ] 

SENATOR AYALA: I have a couple of questions. 

Is there a problem getting public input, hearings for 
rule making process, for the PUC? I get some complaints that 
the meetings are not that public for public input. Is there a 



46 

1 problem with that? 

2 MR. NEEPER: Let me deal with your question as having 

3 two parts. 

4 The first part, if I understood correctly/ Senator, was 

5 in terms of the ability of entities, or groups, or people to 

6 bring issues before the PUC. 

7 I have come across, as a result of having office hours 

8 in Southern California, particularly, I have come across 

9 individuals or small groups who have had issues and who have 

10 felt frustrated in terms of being able to get a full airing of 

11 those issues as the individuals saw them. 

12 My impression is that part of what was being talked 

13 about was a function of the staff that the PUC has in the area 

14 of consumer outreach, dealing with individuals and receiving 

15 complaints from individuals. We have had an overwhelming number 

16 of complaints and too few people — 

17 SENATOR AYALA: How about staff? 

18 MR. NEEPER: ~ at the staff level to be able to deal 

19 with them. So there has been some frustration on the part of, 

20 if you would, the customer level. That we are attempting to 

21 deal with in the upcoming budget and the upcoming proposed 

22 reorganization by the PUC within the PUC itself. 

2 3 The second part of what you may have had in mind refers 

24 to a complaint that I heard when I first came on the Commission, 

25 which was, too much of what appears to be decision making isn't 

26 being made in open hearing, before God and country, and whoever 

27 else cares to attend a publicly noticed meeting. 

28 One of my experiences in the past has been to serve for 



47 

20-some years on a little board of the City of Los Angeles, 
called the Employee Relations Board. I was on that board for in 
excess of 20 years. That's a five-person commission, just like 
the PUC is a five-person commission. 

And we at the City of Los Angeles lived under the Ralph 
M. Brown Sunshine Law, if you would. And we got along just 
famously with the Ralph M. Brown Sunshine Law by never talking 
outside the hearing room about a case, having the case presented 
fresh in the hearing room, having all the evidence received, all 
the argument made in the hearing room, and deciding the case 
immediately upon the close of argument. 

So, I have a. history of living in that kind of an 
atmosphere. 

The PUC cases are much more complex, much more long 
lived, and have had much more occur before they ever get to the 
Commissioners. So, the two situations are analogous. 
Nonetheless, I am used to debate, and decision, and discussion 
in a public forum, and perhaps have more of a background in that 
regard than any of the other Commissioners. 

One of the initiatives that I have attempted to 
institute is to create the circumstance where we naturally, 
extemporaneously, discuss among ourselves and with staff, in 
open meetings, matters that are before us for decision. My — 
and that initiative was first expressed to the other 
Commissioners. It has been expressed to the staff, and I've 
told them that I have various techniques for trying to 
accomplish that. 

My understanding is that we are increasingly 



48 

comfortable in discussing our decision making activity in a 
public way, and that persons who used to attend PUC meetings in 
August and September of last year, and fell asleep with the 
boredom, now keep their eyes open, and occasionally actually 
listen to spirited debate. 

I believe we are a long way toward correcting those two 
criticisms . 

SENATOR AYALA: I think you're correct, in that a lot 
of people complain about the staff that probably make 
determinations that members probably never hear about. They've 
got too much authority, is what I've heard, and many times the 
members are not even aware what the staff is doing over there. 
I don't know how you can correct that. 

But my other question is, do you have a position on 
SCA 21 that would provide for direct election of PUC 
Commissioners? 

MR. NEEPER: Direct election, there is a proposed bill 
that has in mind submitting the PUC to Ralph M. Brown. I 
believe that is your bill, and I've already spoken to you 
privately, but now I'll speak to you publicly and indicate, as I 
earlier indicated, that I don't have any difficulty at all with 
Ralph M. Brown. I am perfectly happy to discuss matters in 
public. 

Now, with respect to direct election of Commissioners, 
I am perfectly happy with the present system. I do not consider 
it a PUC's Commissioner — I don't think I was hired to decide 
the question whether or not I ought to be elected, or whether I 
ought to be appointed. 



49 

I view that as question appropriately before the 
Assembly/ Senate, and Governor, or the people, if you will, and 
peculiarly, ' not before me. 

From my point of view, the Commissioners, to a person, 
are very hard working people who spend 50-60 hours a week, in 
fact, working PUC cases, working PUC business. 

To the extent that a Commissioner would spend time 
after becoming a Commissioner on re-election activities, my own 
feeling is, that deprives the state of some resource that could, 
in a very worthwhile way, be spent just doing PUC business. 

On the other hand, the matter of election as opposed to 
appointment has been discussed by those who are attracted to the 
idea of election in terms of accountability, and that 
characterization has been a characterization that has caused 
some people to say that they favor an election process, because 
it then makes one accountable to a constituency. 

From my point of view, I've never been elected, so I 
can't say how much more accountable I would feel if I were an 
elected official than if I am just an appointed. 

I have to tell you that I feel as accountable being 
appointed as I think I can possibly feel. I feel accountable to 
the Governor. I feel accountable to the Legislators who 
communicate with me. I feel accountable to the parties who want 
to come in and talk to me, and tell me why I ought to vote one 
way or the other. I feel accountable to those people that I 
seek out, because they don't come and see me, and find out what 
they think. I feel accountable to my fellow Commissioners. I 
feel accountable to the administrative law judges who work very 



50 

hard trying to prepare a decision that's appropriate. 

I don't know how more accountable I can feel, but you 
all have experience. You have been in situations other than 
elected, and you have been in situations where you're elected. 

And so, I end upcoming back to the point, that's really 
a decision for you, Senator Ayala. 

SENATOR AYALA: You heard me ask Mr. Moore of the State 
Energy Commission about the duplication of the two, the PUC and 
the State Energy Commission. 

Do you think there's need to consolidate the two bodies 
into one? 

MR. NEEPER: Let me respond this way. 

We have four Commissioners who are concerning 
themselves with that. Two serving on the Little Hoover 
Commission to come forward with recommendations. 

We have parties, utilities, we have Senators and 
Assemblypersons and Governor's office people, all concerning 
themselves with that. At the state level we're using a whole 
bunch of person power resources to investigate that. There must 
be something there. 

SENATOR AYALA: Is any move afoot to take the action 
you just mentioned? Is research taking place right now to see 
if they can do that? 

MR. NEEPER: I believe that there's a huge research 
activity in the Little Hoover Commission to come up with various 
aspects of governmental reform. My understanding is, it is 
viewed, at least in our little PUC world, as being heavily 
involved in looking at the CEC and PUC, and what the future role 



51 

of the CEC ought to be, what the future role of the PUC ought to 
be, and what they ought to be in combination with each other. 

SENATOR AYALA: Thank you very much. I appreciate your 
answers. 

CHAIRMAN LOCKYER: One of the issues that's come up on 
the PUC restructuring issue, that is the sort of institutional 
environment, not the specific controversies that affect 
electric, or trucking, or any of the topics that you have to go 
through, was the idea of some limited form of judicial review of 
Commission decisions. 

Perhaps that was discussed during my absence. 

MR. NEEPER: No, it wasn't, Senator. 

CHAIRMAN LOCKYER: Have you been involved in any of the 
consideration of that issue, or do you have a settled opinion 
about the topic? 

MR. NEEPER: Let me responds this way. And again, it 
may be a little more lengthy than you anticipate, but it's 
because of the way I've been trained to think. 

From my point of view, the judicial activity in the 
rule making activity of the Commission is best viewed not by 
separating out judicial review, but by looking at it from its 
beginning through its end, which end may be a change in judicial 
review from that which exists now. 

From my point of view, we're an awfully good agency 
that can be improved, in that we have to try to improve 
ourselves, and you have to look at us. If you find ways in 
which to improve us, God love you, the Senate, and the Assembly, 
and the Governor will improve us, whether we think it's 



52 

appropriate or not. 

With respect to judicial review, it starts with cases 
coming in, matters coming in, rule making or judicial. From my 
point of view, we can improve ourselves by trying, within the 
time available to a Commissioner, to ensure that ■ the 
Commissioner is familiar with the case from its initial scoping 
of issues, and its initial presentation of scoped issues in a 
pre-hearing conference to the parties. 

Following that, I believe we benefit, to the extent we 
can find individual Commissioner time, to the Commissioner being 
familiar with the evidentiary presentation. No Commissioner is 
ever going to make all evidentiary hearings of all matters 
assigned. 

Somebody asked me how many cases do I have assigned. 
This morning I guessed 50. I went back and took a look, it's 
over a hundred. There's just no way I'm going to hear all the 
evidence in all these cases. As a matter of fact, I'm attending 
a fair number of evidentiary hearings at this point, as well as 
pre-hearing conferences. 

That leads to a situation where there is a proposed 
decision that comes before the Commission from an ALJ that, 
hopefully, in a very substantial way, has the assigned 
Commissioner a party to the formulation of the contents of that 
proposed decision. 

Thereafter, we have five Commissioners who vote on the 
question, rule making or judicial. And I hope that we have a 
record that permits the five Commissioners to choose among 
alternative decisions as opposed to be forced to take, yes or 



53 

no, the decision of an administrative law judge. 

I believe we are working that way, particularly, for 
instance, Commissioner Knight is working that way, Commissioner 
Duque is working that way, and I believe that I am following in 
their footsteps in trying to work that way very much myself. 

CHAIRMAN LOCKYER: You would bifurcate somehow the 
various issues that came up in a single decision? 

MR. NEEPER: We can separate the issues and create a 
record that permits us to accept from the administrative law 
judge one, three, and five, and respectfully differ with two and 
four. 

CHAIRMAN LOCKYER: You don't do that now? 

MR. NEEPER: From my point of view, the most difficult 
thing is producing a record whereby the parties are done due 
process by having evidence that permits alternate views, if you 
would. That's really the trick. 

The other trick is keeping it moving so we get justice 
in the lifetime of the parties involved as opposed to their 
heirs. 

Then, we've finally gotten to a decision by the 
Commission which is subject to a claim or a demand for 
rehearing. And the rehearing process has been framed in terms 
of legal error. A rehearing is granted when there is legal 
error determined by the same five Commissioners. 

There is also a petition for modification, and our 
interplay between rehearing and modifying is not as clear as it 
can be. And yet, at times we come upon situations where we made 
a policy decision that, in retrospect, and after further 



54 

1 argument, we want to modify in some respects, but it isn't a 

2 function of legal error. 

3 CHAIRMAN LOCKYER: Who does the modification? 

4 MR. NEEPER: We do. Five Commissioners do it, and that 

5 needs clarification. 

6 The question then becomes in part, what happens after 
we've engaged in rehearing? Should it only go to the Supreme 

8 Court, as is presently the case, with very few matters going to 

9 the Supreme Court and with relief being granted by the Supreme 

10 Court. Appropriately, by definition, it never makes an error. 

11 But relief to the petitioning party granted seldom. 

12 Should it be revised so as to permit a district court 

13 of appeal to consider the judicial matters that have come up and 

14 not been granted on rehearing? And if it is before a district 

15 court of appeals, should it be one district, a specialized 

16 district court of appeal, or should it remain the way it is with 

17 respect to only going to the California Supreme Court, or should 

18 we allow the superior courts in. 

19 From my point of view, speaking rough and dirty, I 

20 wouldn't let the superior courts or the muni courts into 

21 anything involving the PUC. They are so over-burdened. They 

22 are so trial court oriented that they're not going to bring the 

23 minimum expertise to PUC-type matters. That is, that's an 

24 appropriate expenditure of judicial resources. 

25 With respect to if you were to decide that you wanted a 

26 DCA involved, whether it ought to be to be all DCAs or one in 

27 particular, my preference probably would be for a particular 
2 8 DCA, because I think, over time, the judges of that DCA will 



55 

become educated and it'll prevent forum shopping. 

I very much fear forum shopping if it's unlimited in 
terms of which DCA parties can go to. You know how parties who 
are opposed to particular legislative acts that have been 
engaged in will shop for a forum that they think will shut you 
down. 

Well, that ought to make you mad, if it doesn't. You 
may be a very patient individual and not have that make you 
made. But it would make me mad. 

So, I would kind of oppose and want a specialized 
judicial forum at the DCA level. 

I myself would move — would try to keep it limited to 
judicial-type cases, as opposed to policy cases, because I do 
not think that lawyers who have become judges are particularly 
skilled at making the policy kind of judgments that you, the 
Senators, you the Assemblypersons, you the Governor make every 
day of the year. And that we, in our little way, the PUC, make. 

CHAIRMAN LOCKYER: That was a good answer. I don't 
mind the length of it at all. 

I'm seeking a little more specificity. There was a key 
"if", which was, if you were to decide to have appellate 
jurisdictions hear a matter, then your preference would be the 
more specialized single appellate forum. 

But you didn't express a view as to whether that would 
be sensible or appropriate to have an appellate hearing at all. 

MR. NEEPER: I consider it sensible to have it. I 
consider it sensible not to have it. I consider both sides of 
the debate to be sensible. 



56 

If you ask me to make my choice/ my choice would be, 
I'm perfectly happy with the way things are right now, but 
that's because I never make mistakes. And I can certainly 
understand a party's desire to go beyond me. 

I have a very negative attitude towards multiple layers 
of review because I think it is very wasteful of the public 
assets and does not produce increased judgement. So that if we 
are going to have review at the DCA level, then I would like to 
restrict review by the Supreme Court, in the very greatest way 
that I possibly could, simply to get finality. 

CHAIRMAN LOCKYER: They don't seem to have much 
appetite for these matters, so it may be, as a practical matter, 
you wouldn't even have to tell them to avoid these on appeal. 

I mention this only because I think I probably should 
additionally mention that it's gotten to be controversial in 
this building because the former Chair was very energetic in 
trying to oppose legislation that would create an appellate 
forum to consider disputes on the policy making, or the judicial 
type orders, not the law making or policy-type decisions that 
you render. 

I hear gossip that the Chair might be reappointed. I 
think we would probably have a very quick and expeditious 
hearing on that, and he probably would be turned down within two 
weeks of being reappointed. 

MR. NEEPER: The first person who heard my views on 
judicial — on the appeal aspect of things is the former Chair. 
And I expressed to him privately what I just expressed to you 
all, which is, I see both sides of the debate. I do not have a 



57 

strong view. I do not have a death-defying view on either. I 
certainly understand DCA — 

CHAIRMAN LOCKYER: You've ducked that bullet, 
Commissioner. 

I partly appreciate the opportunity to have a forum to 
say Mr. Fessler's gotten himself into the middle of a lot of 
controversy around here because of the extent to which he has 
lobbied on this issue. And his term is about up, but there at 
least is comment that he might be reappointed, and I don't think 
we'll find him serving with you much longer. 

Other questions from Members. 

Well, I must have missed a really brilliant opening. 

MR. NEEPER: Senator Peace was smashing, and Senator 
Leonard in his silence was even more smashing. 

CHAIRMAN LOCKYER: Keep your eye to the silent one. 

Senator Petris. 

SENATOR PETRIS: With all this talk about restructuring 
and everything, do you foresee any impact on the current program 
for lower rates for low-income households? Would that pretty 
much continue the way it is? 

MR. NEEPER: Lower rates for the low-income households, 
the rates presently paid by low-income households are subsidized 
rates. They are below cost and — they are below cost, and they 
are below what would be set but for the fact that the 
individuals are low income and need the assistance in order to 
accomplish our basic mission of universality. 

The low income — the low rates are a function in part 
of legislative action, I believe, as well as PUC action. 



58 

1 I anticipate that we, the PUC, in our electricity 

2 restructuring road map procedure, are relying on the California 

3 Energy Commission to be a substantial source of expertise and 

4 interest with respect to renewables. I hope they take an 

5 interest in low income as well, but they do not profess to have 

6 quite the same level of expertise. 

I hope that they will provide leadership to us in 

8 formulating our attitude with respect to renewables and that 

9 kind of thing. And I would be extremely interested in their 

10 views with respect to low income, as should you be. 

11 But I anticipate that, in essence, the expire package 

12 of renewables and low income support, in one way or another, 

13 must come to the Legislature for your views on its continuation, 

14 the level at which it continues, and the manner in which it 

15 continues, and the manner in which it is funded. 

16 SENATOR PETRIS: I understand that part of the — 

17 MR. NEEPER: Excuse me. I wasn't — Senator Lockyer 

18 pointed me out as having ducked one question. 

19 My recommendation would be that we continue the way it 

20 is now, essentially, in a restructured electricity industry. 

21 SENATOR PETRIS: I understand that part of the drive 

22 for restructuring has to do with competition or lack of it. 

23 Is that a genuine problem that serves to the detriment 

24 of the consumers, or is that just part of the current fashion of 

25 deregulating as much as we can in every direction? 

2 6 MR. NEEPER: Senator, I came on at a time that the PUC 

27 had made a basic decision to open up generation — generating 

28 electricity to competition and market forces. The decision was 



59 

a decision already at the time of my appointment. 

Do I agree with it? I agree with it. It's being 
done. 

It is going to benefit California? Presuming that the 
team that is putting together the package — and the team is the 
PUC with the CEC — but the PUC, the California Legislature and 
Governor, and the Federal Energy Regulation Commission, in 
combination, have the opportunity to, in fact, benefit 
relatively quickly California business, from the mid-sized to 
the large, California other consumers, from the mid-size to the 
large. And if we're really good, we have the opportunity 
relatively quickly to benefit residents, the little folks like 
you and me when we're in our homes, we have the opportunity to 
benefit them relatively quickly to the extent that we individual 
residents want to be benefitted. 

My wife won't ever change from our present electricity 
provider because she's just that kind of a person. The rates 
will come down over time, even for the individual householder 
who doesn't aggregate and do some direct buying. 

But from my point of view, there will be a great deal 
in the next two or three years of individual householders 
getting together and aggregating and doing direct buying or 
forcing the equivalent of direct buying of electricity, and it 
will drive rates down. That's my own view. 

SENATOR PETRIS: There's a little bit of that going on 
now. 

MR. NEEPER: Yes, there is. As a matter of fact, 
already the pressure for lowering rates is upon the existing 



60 

three utilities, and it comes in the form of some of the larger 
consumers saying, "I want out unless you lower my rates, I want 
out of electricity." 

SENATOR PETRIS: I'm interested in the allegation, I 
guess it's a fact, that we have higher rates here than 
elsewhere. I wonder if other things have been taken into 
consideration. 

I guess if you've one a thorough study, they've checked 
all the angles. We have the highest paid cabbies in the 
nation. We pay more for stuff than people do elsewhere, but we 
also get higher pay than they do elsewhere. 

So, I'm wondering, relatively, if this is a legitimate 
criticism, that we're paying higher rates for utilities than 
they pay elsewhere? 

MR. NEEPER: I do not believe that the higher rates we 
are paying are a function of a higher wage rate for 
Californians . 

I believe the higher rates are historically 
identifiable in part by reason of our investment in nuclear 
power, in part by our investment in qualifying facilities or 
alternate fuel sources, things like that. 

I believe that it is possible in the next several years 
to reduce the present burden on California ratepayers relating 
to particularly nuclear power and other worn out plant — other 
noneconomic plants, though it is a bitter pill for many of us to 
swallow, the cost of getting rid of that burden. But getting 
rid of that burden without increased costs is worthwhile in 
order to realize the benefit a few years down the road. 



61 

And under our order, in fact, what we have done is 
mandate about a three percent reduction, in any event, for the 
householders. So, we have mandated over even the period of 
transition costs a reduction in power rates through a price 
freeze that doesn't recognize Consumer Price Index. 

SENATOR PETRI S: Thank you. 

CHAIRMAN LOCKYER: On that, Senator Ayala. 

SENATOR AYALA: Just one more question. 

You've indicated that the PUC is in the process of 
opening it up for competition. 

MR. NEEPER: At the generation level. 

SENATOR AYALA: How did it occur with utilities who 
have franchises? How can you make those competitive? 

MR. NEEPER: We have issued an order that says anyone, 
any entity that owns electricity, can sell anywhere in the state 
presently served by a privately owned utility. We just said 
it. 

And when we said it in our Electricity Restructuring 
Order, we said it understand circumstances where that might be 
challenged in a lawsuit by any of the then-existing utilities 
that wish to engage in a franchise, you can't mess with my 
franchise theory. And no one has. 

And the utilities have filed with the Federal Energy 
Regulation Commission a filing that says they're going along 
with our decision, and each of them has been before you in one 
way or another with respect to the legislative process that's 
going on. 

And the answer to your question is, while it might have 



62 

1 been challenged, and may yet be challenged/ it hasn't been yet. 

2 SENATOR AYALA: But current policy is to allow whomever 

3 to go into franchise area to compete? 

4 MR. NEEPER: Absolutely. There are a number of 

5 entities — it'll be like telephone, with potentially some of 

6 items ills as well as the benefits. 

7 In telephone, long distance and toll, we had resellers 

8 who don't own a speck of facility but sell long distance and 

9 toll service to you in competition with GTE or Pac Bell, or 

10 Roseville, if you would. 

11 And the same thing, come January 1, 1998, will exist 

12 with respect to electricity. ENRON, or anyone else without 

13 ownership of any generating facility at all, will be able to buy 

14 electricity in the open market and sell it to Mrs. Neeper at 

15 1237 Cypress Court, San Diego, in the SDG&E territory. 

16 CHAIRMAN LOCKYER: Sure you want to tell everyone your 

17 home address? 

18 MR. NEEPER: We're in the telephone book. We've never 

19 been secret. 

20 SENATOR AYALA: Thank you very much. 

21 CHAIRMAN LOCKYER: Direct access. There are at least 

22 some who argue that it is technologically infeasible, that it's 

23 a nice idea, but that the way the grid technology works, that 

24 the idea for all these sort of independent generators running 

25 around, selling to customers in a nongeographic way, is 

26 infeasible. 

27 Could you comment on that contention, and what you've 

28 learned from your experience? 



63 

MR. NEEPER: I couldn't agree more. It is infeasible. 
It's infeasible in telecommunications. 

Now we've made both statements. 

It's infeasible in natural gas. Now we've made three 
statements. 

The problem is. Senator, both you and I know it's not 
infeasible in natural gas. Doesn't work real well, but not 
because of technological difficulty; simply because there has 
not been marketing success so far. 

With respect to telecommunications, there is wild 
marketing success, if you would, and the technology is just as 
biting, difficult, as in electricity, I believe. 

It's infeasible in electricity until the competitors 
figure out how to make it work. They go out there and sell it 
effectively. 

My guess is, it wouldn't do as well as 
telecommunications. It'll do better than natural gas. 

CHAIRMAN LOCKYER: That's the constraint, you think, is 
largely of market acceptability? 

MR. NEEPER: I believe so. I believe so long as the 
Commission and the FERC order that the continuing monopoly 
elements — transmission and distribution — be treated as 
common carriers, everybody who wants to ride on those roads can 
ride on those roads. 

And so long as we, the Commission, make sure that any 
technical, technological infeasibility is dealt with promptly, 
with a requirement that the technology be solved — which is 
what we did in telecommunications. We just said, go on out and 



64 

solve it. Just as you did with respect to natural gas and 
electric vehicles, go on out and solve the problems. 

CHAIRMAN LOCKYER: We may be sort of exploring the 
limits of analogy here. I guess the question is, is it the 
Internet or a toll road that people are going to be able to get 
on? 

MR. NEEPER: I guarantee it's a toll road, costs 
involved. 

The Internet right now is free. But toll road is a far 
better analogy. 

There is a cost to using, in telecommunications, the 
local loop of Pacific Bell or GTE. There's a cost involved in 
using SDG&E's distribution system, and they've got to be paid 
for it. It would be absolutely inappropriate not to. 

CHAIRMAN LOCKYER: Stranded costs. You talked about 
how, even with the current order of the 100 percent recapture, 
that there would be some three percent, I think you indicated, 
reduction in residential rates. 

MR. NEEPER: In the sense that I meant it, yes, price 
cap with no recognition of increasing the price cap by reason of 
the CPI. 

CHAIRMAN LOCKYER: What about other users? Are there 
numbers that relate to their use that are similar, or is it just 
on the residential that there was that price cap? 

MR. NEEPER: I think it's just residential. Do you 
happen to know, Wes? Excuse me, it was our Executive Director, 
Wes Franklin, and he didn't remember off-hand. 

CHAIRMAN LOCKYER: If he doesn't know, then ~ 



65 

MR. NEEPER: It had to do with the then-existing 
tariffs. 

CHAIRMAN LOCKYER: This predates you? 

MR. NEEPER: No, no, no. I voted for it, but my memory 
of the decision is that it involved — I said residential, but I 
believe it's with respect to all tariffs. 

CHAIRMAN LOCKYER: So, any size user, in effect. 

MR. NEEPER: Isn't going to get its price increased, 
though there is a concern that some tariffs may not exist in 
the future. 

CHAIRMAN LOCKYER: Are there are similar things 
happening in other states? 

MR. NEEPER: Yes, there are that have happened, are 
happening, will happen. 

CHAIRMAN LOCKYER: How did they deal with the problem 
of stranded costs? 

MR. NEEPER: Differ ways. The last one, New York, 
dealt with it by not dealing with it. They just ducked the 
question in their first decision. We didn't duck the question. 

Others, I believe, have done 80 percent. I'm really 
not a student of other states. I've kind of concentrated on 
California. 

CHAIRMAN LOCKYER: Still, their seems to be no one way 
to do it? 

MR. NEEPER: Absolutely not. 

CHAIRMAN LOCKYER: Has it ever been argued, 
particularly since you have considerable experience as a labor 
attorney, that in effect the labor charges are a form of 



66 

stranded costs in this environment? 

MR. NEEPER: Yes, yes. We have a specific provision. 
I was in part responsible for it in the electricity 
restructuring order in December that recognizes that the order 
was driven in part in order to hold substantial California 
business in the state, rather than fleeing, in order to hold a 
substantial number of California jobs in the state, rather than 
departing the state. And the continuation of those jobs is a 
benefit to residents, because residents are the people who hold 
those jobs. 

But, there's price that we pay, and that is that 
potentially, there was going to be restructuring of the work 
force in the utilities. And that restructuring might involve 
downsizing, and they're real people, as you all know from your 
constituencies. They're real people who get downsized, and they 
need help. 

So, what we have recognized is that the utility 
involved in potential downsizing has to provide the help to 
those California job holders, and the costs of providing that 
help should be recognized as a stranded cost. 

Excuse me, that was a lengthy answer, but it's in there 
from the beginning. 

CHAIRMAN LOCKYER: No, frankly, the thoughtfulness with 
which you approach your responsibilities is encouraging. 

We like to think that at least the Senate is the more 
deliberative of the two bodies and don't mind finding others 
that may react that way to complicated issues that slogan 
doesn't necessarily provide an adequate understanding. 



67 

1 There's been, I guess an ongoing discussion of who 

2 speaks for consumers/ or who in the world gets to talk to you, 

3 directly or indirectly. I believe there are these ex-parte 

4 communication rules, that you at least have to log it or 

5 something? 

6 MR. NEEPER: If it occurs under certain circumstances, 

7 \ when we're too close to decision time. 

8 CHAIRMAN LOCKYER: Then you have to make a notes of it? 

9 MR. NEEPER: Somebody files. Whoever came in and 

10 talked to me files an ex-parte — notice of ex-parte 

11 conversation. 

12 CHAIRMAN LOCKYER: They have that responsibility? 

13 MR. NEEPER: Yes, the Commissioner does not. And the 

14 j parties, I think, are quite aciduous in filing those. 

15 CHAIRMAN LOCKYER: There seems to perhaps be a gap in 

16 the regulatory scheme in that respect. This may just be normal 

17 Capitol paranoia, or whatever one might call it, but it doesn't 

18 i seem that the Governor's Office is required to make any filings 

19 if they talk to you about an issue. Do they? 

20 MR. NEEPER: I don't believe either a Senator is 

21 required or the Governor's Office is required. 

22 CHAIRMAN LOCKYER: Do either talk to you about issues? 

23 MR. NEEPER: Senators frequently write letters on 

24 matters of which they become aware that their constituents are 

25 : interested. I had a whole bunch of letters from Senators and 

26 Assemblypersons with respect to raising — the one that I got 

27 i the most on was raising rates in the desert in the summertime. 

28 If you remember the idea of the air-conditioning tax, 



68 

which was defeated. But I got a number of communications, 
mostly in the form of FAX and letter, from Legislators. I got 
no communication from the Governor's office. 

And on a number of other issues, I've had occasional 
phone calls from Legislators just on a factual level. 

With respect to the Governor's Office, I've had no — 
no meaningful direction or expression of view on any issue of 
which I can think, other than kind of a slanting reference once 
when I was calling about — the Governor's Office about an 
advisor question, where there's a Governor's appointment 
involved. And I made some joking reference to a matter before 
us, and the individual on the other end said, "Well, I don't 
disagree with that." 

Other than that, I've had no communication on those 
from the Governor, though I do, in all honesty, have to say that 
the Governor's Office, as I understand it, is very jealous of 
its right to communicate with a Commissioner as the Governor on 
any issue that the Governor considers appropriate. Just as you 
do as a Legislator. 

CHAIRMAN LOCKYER: I'm sure they would feel that way, 
and I don't dispute it, but there's the sort of paranoid theory 
that he's the puppet master. 

MR. NEEPER: I just need to tell you that I am not in 
communication . 

CHAIRMAN LOCKYER: Do ratepayers need an advocate, and 
should it be internal, external, or how, if there is one? 

MR. NEEPER: I personally believe that ratepayers will 
have an advocate on significant matters, whether I want them to 



69 

1 have an advocate, whether you want them to have an advocate, 

2 whether the Governor wants them to have an advocate, and whether 

3 the utilities do. The UCANs and the TURNs of this world, the 

4 Mexican-American Legal Defense Fund, Greenlining, those kinds of 

5 organizations exist in our world; they exist outside power and 

6 telecommunications and such, and they're going to continue to 

7 exist, and they do a very worthwhile job. 

8 So that the question becomes, should we, the public, 

9 fund out of our taxes, or electricity rates, a consumer 

10 organization that is in some way or another public. 

11 My belief from what I have seen is that I can't go far 

12 enough back to deal with the pre-DRA, but from DRA, has I have 

13 seen it, DRA does a good job. They think of themselves as 

14 underfunded; they think of themselves as understaffed. But 

15 everyone thinks of himself as underfunded and understaffed. 

16 They do a good job, and they serve a public purpose. 

17 Whether or not we ought to continue funding them or not is 

18 really a legislative-gubernatorial question, but I'd vote in 

19 i favor of it myself. I think it's good. It's money well spent 

20 by the public to have publicly accountable advocates. 

21 Then there is the question, should we reorganize them 

22 within our PUC, or should they be outside of the PUC? 

23 CHAIRMAN LOCKYER: What do you think? 

24 i MR. NEEPER: I find kind of a — I sort of like the 

25 argument to take them outside the PUC, put them in a separate 

26 agency. From my point of view, if that were to occur, I think 

27 they'll do almost as good a job. They won't have as much access 

28 to data as easily as they do within the PUC, and that's a loss, 



70 

but it's a price that would be paid. 

On the other hand, from my point of view, that leaves 
the PUC with a staff and a body of five Commissioners whose sole 
job is to try to resolve from matter to matter the tension 
between ratepayers and shareholders. And that's our mission, to 
give full value to the worth of each. 

CHAIRMAN LOCKYER: We've recently had debate in our 
House about the winter power outage, and whether the complaint 
procedures are adequate at PUC. 

One of the Senators had various documents and 
essentially claimed that there was too much — it was too 
difficult to file a complaint and get some resolution on the 
matter, and that maybe the PUC doesn't even keep track of those 
in some way that would useful to your own regulatory efforts or 
ours. 

Have you had occasion to look into the way they handle 
complaints on lost power? 

MR. NEEPER: Let me be as rank on this as I've been on 
other matters, to my detriment as opposed to my shining glory. 

This is a matter on which three or four other 
Commissioners took an intense interest. And I decided from the 
beginning that I wasn't going to put another Commissioner's 
intense interest on the same thing. We had an over-concern on 
the part of the Commissioners, so I've been relatively light in 
this area, depending upon that. 

CHAIRMAN LOCKYER: Fair answer. Doesn't do you any 
damage at all. We all specialize as well out of necessity. 

Other questions? Anyone present who'd wish to comment 



71 

1 | either for or against? 

2 I might note there is nothing but complimentary 

3 J communications about you. No opposition has been expressed. 

4 And we sort of solicit people's comments/ so that if they're out 

5 there, we usually hear them. 

6 I can see why, Mr. Neeper, they've been complimentary. 

7 MR. NEEPER: Thank you. I should share with you that I 

8 attempted to inform all of the organized labor with whom I have 

9 dealt that this was coming up and ask that they communicate with 

10 you if they wish to, and not tell me what they had to say. 

11 CHAIRMAN LOCKYER: Some of them, as well as lots of 

12 others have communicated. 

13 Senator Beverly. 

14 SENATOR BEVERLY: Move we recommend confirmation. 

15 CHAIRMAN LOCKYER: We have a motion. Call the roll, 

16 please. 

17 SECRETARY WEBB: Senator Ayala. 

18 SENATOR AYALA: Aye. 

19 SECRETARY WEBB: Ayala Aye. Senator Lewis. 

20 SENATOR LEWIS: Aye. 

21 SECRETARY WEBB: Lewis Aye. Senator Petris. 

22 SENATOR PETRIS: Aye. 

23 SECRETARY WEBB: Petris Aye. Senator Beverly. 

24 SENATOR BEVERLY: Aye. 

25 SECRETARY WEBB: Beverly Aye. Senator Lockyer. 

26 CHAIRMAN LOCKYER: Aye. 

27 SECRETARY WEBB: Lockyer Aye. Five to zero. 

28 CHAIRMAN LOCKYER: Good luck. 



72 

MR. NEEPER: It was pleasant. Don't know that it was 
fun, but it was pleasant. Thank you. 

CHAIRMAN LOCKYER: All we can ask, probably. 

Okay, we have Sally Rakow. 

Senator, did you wish to make a comment on the previous 
matter? 

SENATOR ROSENTHAL: No, on this one. 

CHAIRMAN LOCKYER: I know you've been very interested 
in these matters, and I didn't mean to foreclose any comment. 

SENATOR ROSENTHAL: My pleasure, Mr. Chairman and 
Members, to reintroduce to the Committee the Vice Chair of the 
California Energy Commission, Commissioner Sally Rakow. 
Governor Wilson has reappointed the Commissioner to the Energy 
Commission. 

I urge your support for her confirmation. She has a 
distinguished record during her first term as a Commissioner. 
She's presided over energy research and development that is so 
important to the continued economic development of the state, 
and she's taken a lead role in major energy facility siting 
cases. She's also supported efforts to promote international 
trade opportunities for California-based energy industries and 
companies . 

And as a former Chair of the Senate Energy Public 
Utilities Committee, I enjoyed working with her even if we had 
differences or disagreements on some policy issues. 

In my opinion, she has earned and deserves your 
continued support. Thank you for the opportunity to introduce 
and to reintroduce and express my support for Commissioner 



73 

1 ; Rakow. 

2 CHAIRMAN LOCKYER: Well, is he aware of all your 

3 political activities? 

4 MS. RAKOW: That was in the nefarious past. 

5 CHAIRMAN LOCKYER: Is this full time? 

6 MS. RAKOW: This job, yes. My political activities 

7 stopped six years ago. 

8 CHAIRMAN LOCKYER: It'll benefit the endangered 

9 Democrats to have you doing something other than fundraising for 

10 Republicans, which you seem to have done in quite an 

11 | accomplished way. 

12 Did you want to open with any comments? 

13 MS. RAKOW: Yes, as a matter of fact, I have a written 

14 statement, if you will indulge me. 

15 Thank you and good afternoon. And it was four and a 

16 half years ago when I was before this Committee seeking the 

17 | recommendation as the public member. 

18 As way of background, I'd like to say that I am a 

19 | fourth generation Californian, and born in San Francisco, raised 

20 in Marin County, and being very parochial, that is my home 

21 still. 

22 But the last five years have certainly been a very 

23 hands-on learning experience. There's a never-ending amount to 

24 know about energy and environmental issues, and that base-line 

25 | knowledge is constantly evolving as the technologies advance, 

26 | and the governance structure changes, which it is now, to meet 

27 these new societal requirements. 

28 A very basic operating principle at the Commission, at 



74 

the Energy Commission, is that the public be engaged in our 
deliberations. And as a few examples of that, one of the 
Commission's program goals is to ensure that all cost effective 
energy efficiency improvements are incorporated into the 
Building and Appliance Standards. Trade organizations, which 
are active before the Commission and do a very excellent job of 
representing their particular constituency, are frequently at 
our public meetings, which, as you know, are every two weeks. 

However, I do think it's incumbent upon the decision 
makers to also keep in mind that there are millions of 
Californians out there who must pay for our decisions, and live 
and operate under our decisions. We have to balance their voice 
as to the wisdom of proposed standards against the benefit. 

On occasion, there have been times when I have felt 
that the benefit does not out weigh the cost of such a standard, 
so I have either been opposed to them, or I have sought prudent 
modification. 

CHAIRMAN LOCKYER: Could you give an example? 

MS. RAKOW: Yes, I can. It has been historically in 
the Commission, every three years there has been a reviewing of 
the standards and a tightening, and making those standards more 
stringent . 

It seemed to me when I was on — served on that 
committee in the first two years of my term, that there was 
not as much accountability or knowledge of whether those 
standards were actually doing what they were professed to be 
doing as far as energy savings, whether that was taking 
place. 



75 

1 And through some personal experience, I asked the 

2 planning commissioners of departments in my particular small 

3 area of the world what their knowledge was. And I found, and I 

4 think that others found, that there was not a broad educational 

5 implementation of the standards. 

6 So, three years ago, we stopped tightening, screwing 

7 the standards, and undertook an educational and implementation 

8 program of which the Building Industry Association was very 

9 involved. We worked with them to better educate the people who 

10 are actually doing the plan and review, the architects, the 

11 engineers, the developers, everybody involved. 

12 And it has been — this just wasn't my idea, but the 

13 committee's idea — but as a result, I think we've made great 

14 progress in energy savings. 

15 As a matter of fact, the Appliance and Residential 

16 Standard over the years that the Energy Commission has been in 

17 existence, are accountable for a great deal of energy savings 

18 and conservation. The figure that I was given was that it was 

19 the equivalent in the last 15 ten years of 13 500-megawatt power 

20 plants. That's not a small little savings. 

21 CHAIRMAN LOCKYER: That's how much was saved? 

22 MS. RAKOW: That's how much was saved. 

23 And then, the projection is that if we just implement 

24 what we have on the books right now, and implement it 

25 completely — now, I'm talking about all standards — it would 

26 be a doubling of that savings. So, that was in our last 

27 Electricity Report. 

28 Anyhow, that is just one example of that. One of the 



76 

most important functions of the Commission is the siting 
process, and I know that Senator Lewis referred to this, to 
ensure that they are, indeed, needed facilities, and they are 
reviewed for certification in an expeditious, safe, and 
environmentally acceptable manner. 

I have served on five power plant siting cases in the 
last five years. Two of them -- I was presiding member of four 
of these cases. Two of them were highly controversial cases. 

We held as many public work shops — all of our work 
shops and hearings on siting cases or projects are public — 
but we held as many as possible in the area of — the 
geographic area of concern. 

The last one, the San Francisco case, which will go 
down in history probably as the most controversial in the 
Commission's history, we held 35 of the 45 public meetings were 
held in the San Francisco area. Many of these were in the 
evening so that the public could attend. 

CHAIRMAN LOCKYER: What was the other one that was 
controversial? 

MS. RAKOW: The Crockett case was quite controversial. 
Another case that was withdrawn through the good judgement of 
the San Diego utility was the South Bay Repowering, and in that 
case EMF, the electric magnetic fields, were a very hot issue. 
But all siting cases have hot issues connected with them. 

I can say that really, after all was said and done, the 
public has been engaged in all of these siting cases, even 
though all of the public were not happy with the outcome. 

As an aside, these cases have — just these cases that 



77 

1 j I have served on, have resulted in 733 megawatts of new 

2 electrical power, over 1,000 new construction and operation 

3 jobs, $626 million of new construction, and this doesn't count 

4 property taxes or other revenues that flow to local 

5 government. 

6 But the electricity world is continuing to undergo 

7 dynamic change, more so in the last five years than since the 

8 Securities and Exchange Commission began to regulate the 

9 \ industry in the early part of the century. 

10 My fellow Commissioners and I, I feel, are really 

11 committed to innovation in the Commission and to be responsive 

12 to the changing world. The Commission today is a very different 

13 one than the one I came to five years ago, and while it's still 

14 in the early stages of redefining itself, its core 

15 responsibilities, I think, once retooled by the Commissioners 

16 and other interested parties, will continue to bring value to 

17 the state. 

18 In the meantime, we haven't stood still. Many 

19 regulatory burdens of an outdated siting requirement have been 

20 discarded, the Building Efficiency Standards have been made more 

21 user friendly. The research and development has been focused 

22 more on bringing the advanced technologies to the marketplace 

23 rather than just having it sit on the shelf. And we have 

24 become, as Commissioner Neeper mentioned, we have become a key 

25 source of unbiased, credible analysis in the current 

26 restructuring proceedings. This is both before CPUC and FERC. 

27 So, in closing, I'm very pleased. I understand you've 

28 received some letters of support from various entities and 



78 

1 individuals. I want to thank them, and thank the Senators. 

2 So, here I am. 

3 CHAIRMAN LOCKYER: Are there questions from any Member? 

4 I'm ready to vote. 

MS. MICHEL: I need to mention, the Sierra Club is also 

6 in support. 

MS. RAKOW: I don't want to do anything from a 

8 unanimous vote, but Senator Lewis did ask about the siting 

9 cases, which is our key function. And there have been, in the 

10 last five years, seven different siting power plant projects. 

11 These are all 50 megawatts and above. 

12 SENATOR LEWIS: Thank you. 

13 SENATOR BEVERLY: I'm pleased to move that we 

14 recommend confirmation. 

15 CHAIRMAN LOCKYER: It's good to be near the latter half 

16 of the agenda. 

17 MS. RAKOW: Everybody's tired. 

18 CHAIRMAN LOCKYER: The early ones kind of wear us out. 

19 MS. RAKOW: You've heard from very articulate 

20 Commissioners. 

21 CHAIRMAN LOCKYER: You obviously have a history of 

22 doing a very fine job, and we're proud to be able to have you 

23 doing what you're doing. 

24 We have a motion. Let's call the roll. 

25 SECRETARY WEBB: Senator Ayala. Senator Lewis. 
2 6 SENATOR LEWIS: Aye. 

27 SECRETARY WEBB: Lewis Aye. Senator Petris. 

28 SENATOR PETRIS: Aye. 



79 



1 SECRETARY WEBB: Petris Aye. Senator Beverly. 

2 SENATOR BEVERLY: Aye. 

3 SECRETARY WEBB: Beverly Aye. Senator Lockyer. 

4 CHAIRMAN LOCKYER: Aye. 

5 SECRETARY WEBB: Lockyer Aye. 

6 SENATOR AYALA: Ayala Aye. 

7 SECRETARY WEBB: Ayala Aye. Five to zero. 

8 CHAIRMAN LOCKYER: It's unanimous, thank you. 

9 MS. RAKOW: Thank you very much. 

10 CHAIRMAN LOCKYER: Good luck. 

11 [Thereupon. This portion of the 

12 • Senate Rules Committee hearing was 

13 terminated at approximately 4:20 P.M.] 

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80 

1 CERTIFICATE OF SHORTHAND REPORTER 

2 

3 I, EVELYN J. MIZAK, a Shorthand Reporter of the State 

4 of California, do hereby certify: 

5 That I am a disinterested person herein; that the 

6 foregoing transcript of the Senate Rules Committee hearing was 
reported verbatim in shorthand by me, Evelyn J. Mizak, and 

8 thereafter transcribed into typewriting. 

9 I further certify that I am not of counsel or 

10 attorney for any of the parties to said hearing, nor in any way 

11 interested in the outcome of said hearing. 

12 y£ IN WITNESS WHEREOF, I have hereunto set my hand this 

13 // day of { ^U^>~<^ , 1996. 

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M >^EVELYN J.JflZAK 5 
icT Reporte 





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Shorthand. Reporter 



303-R 

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